（ii) Explain the income tax （IT), national insurance （NIC) and capital gains tax （CGT) imp

(d) Explain whether or not Dovedale Ltd, Hira Ltd and Atapo Inc can register as a group for the purposes of value

added tax. (3 marks)

(d) Explain how Gloria would be taxed in the UK on the dividends paid by Bubble Inc and the capital gains tax

and inheritance tax implications of a future disposal of the shares. Clearly state, giving reasons, whether or

not the payment made to Eric is allowable for capital gains tax purposes. (9 marks)

You should assume that the rates and allowances for the tax year 2005/06 apply throughout this question.

(b) Draft a report as at today’s date advising Cutlass Inc on its proposed activities. The report should cover the

following issues:

(i) The rate at which the profits of Cutlass Inc will be taxed. This section of the report should explain:

– the company’s residency position and what Ben and Amy would have to do in order for the company

to be regarded as resident in the UK under the double tax treaty;

– the meaning of the term ‘permanent establishment’ and the implications of Cutlass Inc having a

permanent establishment in Sharpenia;

– the rate at which the profits of Cutlass Inc will be taxed on the assumption that it is resident in the

UK under the double tax treaty and either does or does not have a permanent establishment in

Sharpenia. (9 marks)

(ii) The shares held in Date Inc and the dividend income received from that company. (7 marks)

(ii) The UK value added tax (VAT) implications for Razor Ltd of selling tools to and purchasing tools from

Cutlass Inc; (2 marks)

A.SilvaRubio

B.OWENMUMFORDLIMITED

C.Flores;MiltonAaron

D.KIDS,II,INC

A.Silva Rubio

B.OWEN MUMFORD LIMITED

C.Flores; Milton Aaron

D.KIDS, II, INC

A.Silva Rubio

B.OWEN MUMFORD LIMITED

C.Flores; Milton Aaron

D.KIDS, II, INC

A.Silva Rubio

B.OWEN MUMFORD LIMITED

C.Flores; Milton Aaron

D.KIDS, II, INC

A.Silva Rubio

B.OWEN MUMFORD LIMITED

C.Flores; Milton Aaron

D.KIDS, II, INC