Mrs Lammle, who is registered for VAT, has traded as a manufacturer of standard-rated items since 1
Question:
Mrs Lammle, who is registered for VAT, has traded as a manufacturer of standard-rated items since 1 June 2004. She has decided to retire on 31 May 2020, her 65th birthday, and you are asked to finalise her tax position up to that date. You are provided with the following information:
(i) Mrs Lammle has always prepared accounts to 31 May each year. Overlap profits of £37,500 arose on commencement.
(ii) The last accounts will be for the year to 31 May 2020. Interim accounts have been prepared to 29 February 2020, revealing the following:
All of the above figures are net of VAT and contain no disallowable items.
(iii) For the last three months to 31 May 2020 (which is also the last VAT quarter), you have extracted the following figures from the accounting records:
All of the above include VAT if appropriate. There was no stock at 1 March 2020 and there is no outstanding stock left at 31 May 2020. All of the general expenses are allowable for income tax purposes.
(iv) The tax written down value of the plant and machinery carried forward after capital allowances had been calculated for the year to 31 May 2019 was:
No plant and machinery was acquired during the year to 31 May 2020.
(v) The business was sold as a going concern (to another taxable person) on 31 May 2020. The items sold were:
The shop and the workshop were acquired on 1 June 2004 for £30,000 and £21,000 respectively. All of the items of plant were sold for less than original cost.
Required:
(a) Calculate the VAT due for the quarter to 31 May 2020.
(b) Calculate the final adjusted profit for the year to 31 May 2020, after deduction of capital allowances.
(c) Calculate Mrs Lammle's trading income for 2020-21.
(d) Calculate the capital gains tax due on the disposal of the business, assuming that business asset disposal relief is claimed. Mrs Lammle has made no previous claims for this relief. She has no other disposals in tax year 2020-21 and has no capital losses brought forward.
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