Web & Away Ltd has decided to sell the car park attached to the St Thomas factory for 155,000

proceeds, the sale is expected to complete (finalise) on 1 September 2020. Sofia would like to

know the capital gain which will arise on the disposal based on the information she provided in her

email to Tay Peng in June.

Required: Calculate the chargeable gain on the disposal of the car park, based on 2019/20 tax

rules and before any reliefs are taken.

EXHIBIT C EMAIL from Sofia Randall

Tay

Thanks for meeting me last month. I am looking forward to meeting your

tax senior to discuss Web & Away Ltds tax affairs for the financial year

which has just ended. There are a couple of other points which I will

probably also take an opportunity to discuss with them:

A developer company has shown interest in purchasing the carpark attached

to our St Thomas factory to build houses on. The company purchased the

land together with the factory on 1 August 2016 for 174,000 plus

purchase legal fees of 6,194, and the estate agent estimates that the

current value of the factory together with the remaining unsold land would

be 490,000. The carpark has historically been used for our factory

workers parking.

If Web & Away Ltd makes this disposal we expect, after repaying a

36,000 creditor, there will be 119,000 sales proceeds left for the

company to invest. This is therefore an attractive proposition as the

company is in need of a new precision-engineering machine and a new

powered ventilation system for the factory, although both would cost

around this amount. The decision to sell the land and how to invest the

proceeds will ultimately be business decisions, but the tax effect of the

options will of course be relevant!

I hope, as well as the above, well have time to discuss the companys

historic tax losses as we want to use the losses as quickly as possible and

dont want to miss any crucial deadlines.

I look forward to our meeting.

Regards

Sofia