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BPT exam December 2019 (ACA)

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Original post by fishxyz123
The company only had £6m to spend and his half of the shares were worth 15m therefore they could buy 40% of his half or 20% in total. The 20% gets cancelled. He’s left with 30 out of 80 shares which is 37.5% I.e more than 30% so capital route can’t apply

Think I must have read the question wrong then. I assumed he had 50 shares and his wife had 50 which was transferred to his daughter on her death.
Original post by Accrualworld
Think I must have read the question wrong then. I assumed he had 50 shares and his wife had 50 which was transferred to his daughter on her death.

Yeah that’s right. So his 50 shares were worth 15m but the company only had 6m to spend so they’d buy 6/15 (40%) of his shares which is 20 shares. Those would be cancelled. Then there would be 80 shares in circulation and he would still have 30 of them and hence 37,5% - how did you calculate it?
Original post by fishxyz123
Yeah that’s right. So his 50 shares were worth 15m but the company only had 6m to spend so they’d buy 6/15 (40%) of his shares which is 20 shares. Those would be cancelled. Then there would be 80 shares in circulation and he would still have 30 of them and hence 37,5% - how did you calculate it?

Ahh That’s where I wrong wrong. Worked out 40% and completely forgot during calculation he only owns 50 shares. That’s ruined my night 🤧
Original post by Accrualworld
Ahh That’s where I wrong wrong. Worked out 40% and completely forgot during calculation he only owns 50 shares. That’s ruined my night 🤧

Oh **** I’m sorry mate!
Maybe you made up marks elsewhere?

Did you talk about the tax relief the directors could get on the loan to buy shares in a close company?

Or the possibility of the guy using EIS relief to defer the gain he makes under plan 2?
Original post by fishxyz123
Oh **** I’m sorry mate!
Maybe you made up marks elsewhere?

Did you talk about the tax relief the directors could get on the loan to buy shares in a close company?

Or the possibility of the guy using EIS relief to defer the gain he makes under plan 2?

Haha not to worry. Hoping I scraped a pass. Really do not wanna resit this paper again!The EIS didn’t even come to mind if I’m honest. Spoke about the close company briefly but not too much in detail as I ran out of time. How did you relate it to inheritance tax considerations?
Original post by Accrualworld
Haha not to worry. Hoping I scraped a pass. Really do not wanna resit this paper again!The EIS didn’t even come to mind if I’m honest. Spoke about the close company briefly but not too much in detail as I ran out of time. How did you relate it to inheritance tax considerations?

I said that if plan 2 was chosen then part of the inheritance will be formed of the cash from the proceeds of sale of shares but under plan 1 then there will still be shares at death so BPR May well apply, this saving money at death. Can’t remember what else I said about IHT tbh, what did you say?
What did you guys put for which share scheme to recommend at the end of question 3?
Original post by fishxyz123
I said that if plan 2 was chosen then part of the inheritance will be formed of the cash from the proceeds of sale of shares but under plan 1 then there will still be shares at death so BPR May well apply, this saving money at death. Can’t remember what else I said about IHT tbh, what did you say?

Yes I spoke about that too as you can’t get BPR on cash. Cannot remember what else tbh. I think I just start waffling writing about how much death tax they can save on future because of the NRB available. Took me a while to get my head round Q1. As a result I only had 20 mins for Q3 which wasn’t ideal. Oh well! Good luck for results! Last professional paper?
Original post by Anonymous511
What did you guys put for which share scheme to recommend at the end of question 3?


I went with EMI. It was either that or the CSOP. SAYE not available as has to be available to all employees.
EMI has benefits like being issued at a discount.
what did you go for?
Original post by Accrualworld
Yes I spoke about that too as you can’t get BPR on cash. Cannot remember what else tbh. I think I just start waffling writing about how much death tax they can save on future because of the NRB available. Took me a while to get my head round Q1. As a result I only had 20 mins for Q3 which wasn’t ideal. Oh well! Good luck for results! Last professional paper?

Yeah it’s easy to go off on tangents for sure. This was only my second professional paper, did TC the same day

Question 2 was odd. Nothing really going on with the computation table they provided apart from the 104k capital loss. What did you write for Q2? I went with CFC, DPT and TP risk for the first part
Original post by fishxyz123
I went with EMI. It was either that or the CSOP. SAYE not available as has to be available to all employees.
EMI has benefits like being issued at a discount.
what did you go for?

I wrote about CSOP as he wanted to retain the employees. For CSOP exercise period was 3-10 years after grant whereas EMI was anytime within 10 years
Original post by fishxyz123
Yeah it’s easy to go off on tangents for sure. This was only my second professional paper, did TC the same day

Question 2 was odd. Nothing really going on with the computation table they provided apart from the 104k capital loss. What did you write for Q2? I went with CFC, DPT and TP risk for the first part

Ahh okay. Good luck for the rest! I’d focus a LOT on FAR! Yeh I found it odd. I spoke about CFC&DPT. in terms of the capital loss did you pro rate it for the company that joined partway through the year?
Original post by Accrualworld
I wrote about CSOP as he wanted to retain the employees. For CSOP exercise period was 3-10 years after grant whereas EMI was anytime within 10 years

Good point I didn’t spot that. I said that EMI could offer shares cheaply (at discount) and then the incentive to stay on at least a year would be the fact that entrepreneurs relied would apply after 1 year
Original post by fishxyz123
Good point I didn’t spot that. I said that EMI could offer shares cheaply (at discount) and then the incentive to stay on at least a year would be the fact that entrepreneurs relied would apply after 1 year

Ahh didn’t get that point down. Forgot about ER being available. What did you speak about on Q1 (last part) when it was asking about what to invest in?
Original post by Accrualworld
Ahh okay. Good luck for the rest! I’d focus a LOT on FAR! Yeh I found it odd. I spoke about CFC&DPT. in terms of the capital loss did you pro rate it for the company that joined partway through the year?

I think the loss was in another company that had been in the group for a while so I just explained that wherever it was allocated there would be at CT saving of 19% of the 104k
Original post by Accrualworld
Ahh didn’t get that point down. Forgot about ER being available. What did you speak about on Q1 (last part) when it was asking about what to invest in?

I said that he could invest in EIS and the reinvestment relief would defer part of his gain made of plan 2 was chosen. Or SEIS would EXEMPT part of the same gain. Then talked about limits on investment and IT relied and risk appetite. How about you?
Original post by fishxyz123
I said that he could invest in EIS and the reinvestment relief would defer part of his gain made of plan 2 was chosen. Or SEIS would EXEMPT part of the same gain. Then talked about limits on investment and IT relied and risk appetite. How about you?

Yes speak about EIS and the re investment relief for plan 2. Basically just did a comparison between EIS & SEIS. Also added a bit about how he could invest in a VCT for reduced risk but not sure if that’s applicable.
Original post by Accrualworld
Yes speak about EIS and the re investment relief for plan 2. Basically just did a comparison between EIS & SEIS. Also added a bit about how he could invest in a VCT for reduced risk but not sure if that’s applicable.

Yeah I think it’s relevant as he had 3m to invest and the benefits of EIS stops after 2m I think so he could opt for a portfolio of different investment schemes .

Did you go with deemed domicile for Q3 and the fact he would be only temporary non-UK resident if he moved to jersey for less than 5 years meaning CGT payable in year of UK return?
Original post by fishxyz123
Yeah I think it’s relevant as he had 3m to invest and the benefits of EIS stops after 2m I think so he could opt for a portfolio of different investment schemes .

Did you go with deemed domicile for Q3 and the fact he would be only temporary non-UK resident if he moved to jersey for less than 5 years meaning CGT payable in year of UK return?

Yeh I guess you will get marks if you can back up your points. Yeh for q3 it go to the point I had to basically bullet point. I spoke about how when he returns tax will be liable in that tax year. Did a few calculations but again very basic and all over the place. The part about moving to jersey threw me off. I was expecting a question where you would just talk about the tax. Not actually calculate it
Original post by Accrualworld
Yeh I guess you will get marks if you can back up your points. Yeh for q3 it go to the point I had to basically bullet point. I spoke about how when he returns tax will be liable in that tax year. Did a few calculations but again very basic and all over the place. The part about moving to jersey threw me off. I was expecting a question where you would just talk about the tax. Not actually calculate it

I think the Jersey point wanted you to discuss if he stayed there for longer than 5 years he would not have to pay UK CGT at all.

Can’t really remember what else they asked in Q3?

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