You are a trainee accountant working for Hammond and Fogg LLP (HF), which specialises in advising start-up businesses. Your manager has sent you the following email from a start-up business client called Laura Winns. Laura worked as a sport scientist for Sport pic. Her taxable employment income in the tax year 2018/19 was 85.000 Laura has sent you the following email Email from: Laura Winns To: ACF 306 students Date: 16th November 2020 Subject: Business start up In the tax year 2019/20. I worked for Sport pic until I was made redundant on 5 April 2020. Since being made redundant I have been working on a business idea for a training website and business. I bought some computer equipment and software and have developed a website. I will start to trade on 1 January 2021 - my business will be called TrainUp The business will have two separate income streams: TrainUP will trade through a website. It will charge users a membership subscription providing access to information, tailored training advice and will also sell weights and sport training products via its website. TrainUP will receive 55,000 in 2021/22 for providing my services as a consultant to an exclusive celebrity gym. I have an idea about developing a new wearable tee shirt called Trainwell. I need cash to undertake research and development and to bring the product to market To carry out the research and development, I need to raise 500,000. I am considering two alternative sources of finance: A friend called Milo Jones could invest 500,000 in my business. Milo does not want to be an active partner in the business but would only invest if he could do so tax efficiently. 2. The bank has offered to lend me 500,000. I am reluctant to take on such a large loan. I can sell some assets and borrow the rest from the bank. I intend to take out an after-tax amount of 20,000 from the business each year to cover my living costs. Hope you can help advise me on how to structure my business. I will also need advice about my income tax liability for In March 2021 Laura will raise 500,000 to finance the growth of her business. She will use the net proceeds from the sale of the assets below. If this is less than 500,000 the bank will provide her with a loan for the difference. Laura intends to sell the following assets in March 2021: She will sell a painting by a local artist. She expects it to sell for 5,000. Laura paid 9,000 for the painting in 2016 On 1 January 2010 Laura's father gave her a residential building which comprises of four flats. It had a market value on 1 January 2010 of 500,000. The flats are let out to students. In March 2021 Laura will sell one of the flats for 280.000 and pay estate agent and legal fees of 20,000. The value of the remaining three flats is estimated at 900,000 Laura will sell shares in Astro Ltd, an unquoted trading company, to her sister for 105,000. Laura had bought the shares two years earlier for 100,000 and the shares were worth 180,000 at disposal. The shares qualify for business asset gift relief and Laura and her sister will make any elections necessary to reduce the tax due on this disposal. Laura did not make any capital disposals in the tax year 2019/20. Laura has unused capital losses of 15,000 brought forward at 5 April 2020. Laura has no taxable income in the tax year 2020/21. Required: 21 Calculate the capital gains tax payable in 2020/21 by Laura if she sells the above assets in March 2021. (Assume the rates and allowances for 2019/20 apply). (20 marks) 22 Calculate the amount of bank loan Laura will need if she is to raise 500,000 after taking into consideration the net proceeds from the sale of her assets above. Include a brief explanation (9 marks) 23 Advise Laura on how she could use simple tax planning to minimise the amount of capital gains tax she pays on selling the above assets. (6 marks) You are a trainee accountant working for Hammond and Fogg LLP (HF), which specialises in advising start-up businesses. Your manager has sent you the following email from a start-up business client called Laura Winns. Laura worked as a sport scientist for Sport pic. Her taxable employment income in the tax year 2018/19 was 85.000 Laura has sent you the following email Email from: Laura Winns To: ACF 306 students Date: 16th November 2020 Subject: Business start up In the tax year 2019/20. I worked for Sport pic until I was made redundant on 5 April 2020. Since being made redundant I have been working on a business idea for a training website and business. I bought some computer equipment and software and have developed a website. I will start to trade on 1 January 2021 - my business will be called TrainUp The business will have two separate income streams: TrainUP will trade through a website. It will charge users a membership subscription providing access to information, tailored training advice and will also sell weights and sport training products via its website. TrainUP will receive 55,000 in 2021/22 for providing my services as a consultant to an exclusive celebrity gym. I have an idea about developing a new wearable tee shirt called Trainwell. I need cash to undertake research and development and to bring the product to market To carry out the research and development, I need to raise 500,000. I am considering two alternative sources of finance: A friend called Milo Jones could invest 500,000 in my business. Milo does not want to be an active partner in the business but would only invest if he could do so tax efficiently. 2. The bank has offered to lend me 500,000. I am reluctant to take on such a large loan. I can sell some assets and borrow the rest from the bank. I intend to take out an after-tax amount of 20,000 from the business each year to cover my living costs. Hope you can help advise me on how to structure my business. I will also need advice about my income tax liability for In March 2021 Laura will raise 500,000 to finance the growth of her business. She will use the net proceeds from the sale of the assets below. If this is less than 500,000 the bank will provide her with a loan for the difference. Laura intends to sell the following assets in March 2021: She will sell a painting by a local artist. She expects it to sell for 5,000. Laura paid 9,000 for the painting in 2016 On 1 January 2010 Laura's father gave her a residential building which comprises of four flats. It had a market value on 1 January 2010 of 500,000. The flats are let out to students. In March 2021 Laura will sell one of the flats for 280.000 and pay estate agent and legal fees of 20,000. The value of the remaining three flats is estimated at 900,000 Laura will sell shares in Astro Ltd, an unquoted trading company, to her sister for 105,000. Laura had bought the shares two years earlier for 100,000 and the shares were worth 180,000 at disposal. The shares qualify for business asset gift relief and Laura and her sister will make any elections necessary to reduce the tax due on this disposal. Laura did not make any capital disposals in the tax year 2019/20. Laura has unused capital losses of 15,000 brought forward at 5 April 2020. Laura has no taxable income in the tax year 2020/21. Required: 21 Calculate the capital gains tax payable in 2020/21 by Laura if she sells the above assets in March 2021. (Assume the rates and allowances for 2019/20 apply). (20 marks) 22 Calculate the amount of bank loan Laura will need if she is to raise 500,000 after taking into consideration the net proceeds from the sale of her assets above. Include a brief explanation (9 marks) 23 Advise Laura on how she could use simple tax planning to minimise the amount of capital gains tax she pays on selling the above assets. (6 marks)