ACCA SP Advanced Taxation (UK) 2

Question 1

For UK inheritance tax (IHT), business property relief (BPR) at 100% applies to:

Accepted Answer

Unquoted shares in a qualifying trading company

Answer

BPR at 100% is available for unquoted shares (including AIM-listed) in qualifying trading businesses, removing them from the IHT estate if held for at least two years.

Question 2

Under UK tax law, a 'permanent establishment' (PE) in another country typically gives rise to:

Accepted Answer

Tax liability in the country where the PE is located on profits attributable to that PE

Answer

A permanent establishment (e.g., fixed place of business or dependent agent) in another jurisdiction creates a tax presence there, and profits attributable to the PE are taxed in that jurisdiction under most tax treaties.

Question 3

The UK's 'diverted profits tax' (DPT) targets:

Accepted Answer

Arrangements where multinationals use contrived structures or a lack of UK PE to divert profits from the UK, avoiding UK corporation tax

Answer

DPT (25%) applies to multinationals that use artificial arrangements (including avoiding a UK PE or using entities lacking economic substance) to divert profits that would otherwise be taxed in the UK.

Question 4

In UK corporation tax, 'group relief' allows:

Accepted Answer

One group company's current-year trading losses to be surrendered to and offset against the profits of another group company

Answer

Group relief (CTA 2010) allows a surrendering company's current-period trading losses to be offset against taxable profits of a claimant company, both being members of the same 75% group.

Question 5

Which of the following is subject to the UK 'disguised remuneration' rules?

Accepted Answer

Arrangements where an employer provides loans or assets through a third party to avoid income tax and NICs on remuneration

Answer

Disguised remuneration rules (Part 7A ITEPA 2003) target arrangements that use third parties (e.g., trusts, EBTs) to provide loans, assets or other benefits to employees that are not subject to PAYE/NICs.

ACCA Strategic Professional Practice Test

ACCA Strategic Professional Practice Test

ACCA SP Advanced Taxation (UK) 2