86% + 0 Question 1 The firm of ICAEW Chartered Accountants where you work acts for Isaac. When completing Isaac's self-assessment tax return for 2019/20, you discover that during the tax year, Isaac gave 100 shares in Catta Ltd, an investment company, to his daughter. You have explained to him that this will give rise to a capital gains tax liability based on the market value of the shares at the date of the gift and needs to be disclosed on his tax return. Isaac has asked you to use a lower figure than market value on his tax return as he does not want to pay large amounts of capital gains tax. Isaac has also participated in scheme which was recommended to him by another firm of accountants. The scheme involved a number of different steps, which created a loss, sufficient to cover Isaac's income from renting out various investment properties. Isaac says the scheme should not cause any problems because all the steps in it are legal. Requirements 1.1 Briefly explain the difference between tax evasion and avoidance/planning. State whether Isaac's suggestion to use a lower value than market value on his tax return is tax evasion and the possible implications for Isaac if it is considered to be tax evasion. (5 marks) 1.2 Explain why, even if all the steps are legal, the scheme recommended by the accountants may not be successful in reducing Isaac's income tax liability. (2 marks) Total: 7 marks 1 Question 2 2.1