Rose Brown commenced trading as a dress maker on $1$ June $2020.$ She prepared her

first accounts for the period to $30$ September $2021$ and thereafter to $30$ September each

year. Unfortunately, the business didn$$t perform well in the first period of trading. As such,

she incurred a trading loss. She is confident that her business will grow, and her profits

will increase substantially in the future. Her trading profits since she commenced trading

are as follows:

$$

Period ended $30$ September $2021(45,440)$

Year ended $30$ September $2022(25,800)$

Rose has not received any other income since she started trading. Prior to starting her

own business, Rose was employed. Her income for the following tax years consisted

solely of employment income:

$$

$2016-1716,540$

$2017-1822,960$

$2018-1926,480$

$2019-2025,820$

Jacob and Fabrice commenced in partnership on $1$ July $2020$ preparing accounts to $30$

June. They shared profits $3$:$2.$ Amber joined as a partner on $1$ September $2022.$ They

agreed to share profits $4$:$2$:$2.$ The partnership$$s trading profits since the commencement

of trading are as follows:

$$

Year ended $30$ June $202160,000$

Year ended $30$ June $2022101,040$

Year ended $30$ June $2023126,000$

$7032$AFE$/2223$JANAPR

P a g e $9|11$

Year ended $30$ June $2024132,000$

Required:

$($a$)$ Advise Rose on the loss reliefs that are available to her and explain what factors may

help her decide which loss relief to claim.$(12$ marks$)$

$($b$)$ Calculate Rose$$s trading income assessments for all relevant tax years.

$(7$ marks$)$

$($c$)$ Assuming Rose claims early years$$ loss relief, calculate her net income for $2016-17,$

$2017-18,2018-19$ and $2019-20$ inclusive.$(9$ marks$)$

$($d$)$ Explain overlap profit. When can it occur? $($Give an example$).$ Why is it not applicable

to Rose and how can a taxpayer obtain relief for overlap profits?

$(8$ marks$)$

$($e$)$ Calculate the trading income assessments of Jacob and Fabrice for each of the tax

years $2020-21,2021-22,2022-23$ and $2023-24.$ Calculate Amber$$s trading income

assessment only for the tax year $2022-23.(14$ marks$)$

Total $(50$ marks$)$