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指导英国Coursework assignment Lulu and Rex
Lulu and Rex are married and live together in a nice house in Primrose Hill, North London, owned together. They have a baby called Tinkerbell and a nanny called Wendy. Lulu is an ambitious person but her career so far has not been a conspicuous success. Lulu was the sales director of Wodwo plc and had been since 6 April 2009. Before that Lulu was working abroad. At Wodwo plc Lulu received a generous remuneration package, consisting of the following: • A car selected by Lulu. The list price of this car is £90,000. She contributed £9,000 toward the capital cost on 6 April 2009. All fuel for private and business mileage was paid for by the company. Lulu was not happy at Wodwo. She found her colleagues had different commercial goals from her. They too found Lulu rather a strain and on 31 December 2010 she was handed a P45 and escorted from the building. In other words, Lulu had been sacked with immediate effect. Lulu’s P45 shows income tax deducted of £29,000. She did not receive any redundancy payments or other payments apart from her salary up to 31 December. She was, however, offered her car for nothing, and Lulu took possession of it on 31 December 2010. Its original market value was the list price. Its market value on 31 December 2010 is £40,000. Also, the company cancelled Lulu's loan obligation on 31 December 2010. After leaving Wodwo she stayed at home for a period of reflection. ************** Rex meanwhile calls himself a businessman. He owns several properties and he has a separate business. He does his own book-keeping and tax. Rex owns a furnished cottage in Norfolk. He and Lulu stay there for the whole of August as a rule. The rest of the time it is available for rent at £600 a week, and advertised on a holiday cottage web-site. It is let for 12 weeks to different tenants. No tenant stays for more than thirty days at a time. Rex has elected for the 10% wear and tear allowance. Rex owns three furnished flats in North London. Flat One is rented out to students. Flat Two is rented out to a strange couple called Assia and David. Flat Three is a crack house and is in a shocking condition. It is being occupied illegally by drug dealers but the police are refusing to clear it because the Drug Squad are using it in a surveillance operation. The police are paying the annual rent of £15,000 because of this.#p#分页标题#e# Flat One has three students as tenants. The quarterly rent for the whole flat is £800, payable in advance. The students are sociable creatures and have a party every Saturday night. They refuse to pay the quarter due on 31 December because the central heating is not working properly. Bernard has threatened to set Renee Wisbey on them if they don’t pay up, but he has also said he will fix the central heating. The annual rent on Flat Two at the start of the year was £8,000. Assia and David are going through marital difficulties and Assia moves out on 31 December and goes to live with a famous poet. David returns to his native New Zealand on 31 January leaving the flat empty. Bernard finds a new tenant who moves in on 1 March with an annual rent of £12,000. Bernard believes that Flat Three will have to be gutted when the police remove the drug dealers and completely refurbished. He reckons this will cost at least £150,000 but will be completely tax allowable he asserts. Flat One is on the wear and tear basis; Flats Two and Three on the renewals basis. Rex also owns two unfurnished shops: one in Wood Green, one in Peckham. He has not been able to find a tenant for the Peckham shop. See Appendix One for further information about the properties.
Rex also owns an import/export business whose detailed activities are shrouded in mystery though it clearly makes large profits. It is based in a rented property in Camden Town and employs 36 full-time workers, including 3 office staff, one sales representative and 10 part-time staff. The payroll also includes Lulu who received £55,000 in 2010/11 and has never done any work for Rex’s businesses. Lulu and Rex’s nanny is also on the payroll and was paid £35,000 in 2010/11. Rex helps himself to a wad of £500 in cash drawn out of the business account each day, except Saturdays, Sundays and bank holidays. The warehouse workers are paid weekly in cash; office staff are paid monthly by cheque. Only Rex knows how much profit this business makes and he is not in a hurry to tell anybody, least of all the authorities. He has never told HMRC about the existence of this business and so have never paid any tax on the profits. Also, Bernard has never applied the PAYE scheme to any employee as Rex has wanted the whole operation to be kept secret. Part-time staff each receive £150 a week gross. The sales representative drives a car owned by Rex and drives both business and private mileage. There are also various “consultants” who are paid by the business on production of invoices for various services rendered. Rex also pays £18 a week to each of his full-time employees and £10 a week to each of his part-time employees as subsistence payments, intended to cover travel to work, lunch, etc. the full-time staff have received them since 6 April 2009 Rex uses his own car for business purposes and is paid 350p per mile. Rex has just received a letter from HMRC stating that a PAYE audit team will shortly be arriving at the office in Camden Town. It seems that the Revenue is acting on an anonymous tip-off from an ex-employee.#p#分页标题#e# Rex’s tax affairs have always been a mystery, particularly to the tax authorities. None of his activities are carried out through corporate bodies as he has a strong reluctance to make public any of his affairs. Indeed until now no authority has been aware of the existence of Rex’s “empire”. The last time Rex paid any income tax was when he was working as a kipper slitter aged 16 in a fish factory. After a few days reflecting about her future, Lulu embarks on a new venture: she decides to set up her own business making and selling something she had always loved: clothes. She finds a disused warehouse and enters into a bargain rental agreement immediately. She hunts out a high quality designer and cutter to work for her. Lulu's friend Fleur, a graduate of London South Bank University, produced the projected profit and loss accounts on the next page for this business.
LULU'S GLADRAGS Forecast profit and loss accounts
Notes to accounts 1. Lulu has forgotten to include Class 1 Secondary NICs in costs. 分页标题#e# estimates her capital expenditure in her first period of account Lulu has not made alternative pension plans and is in need of advice. Lulu also has other income in 2010/2011 as follows:
Note 1 Lulu's salary To calculate Lulu's annual salary: a) Reverse the digits of your date of birth For example birth date 31 December 1984 becomes 841,231 divided by 3 = annual salary of £280,410 for the assignment. Round to the nearest whole number Give your date of birth prominently on the title page of the report Note 2 Lulu's loan Find your height in centimetres and multiply by 100. Use this as the sterling value of the loan. We may have to audit this figure so make sure you tell us what it is and that it is accurate.
Individual work. (Worth 50% of your total coursework mark) PART (A). LETTER TO LULU 1. Explain the difference in treatment between allowable expenses for employees, and allowable expenses for the self-employed. (5 marks)
ASSUME THE TAX RATES FOR 2010/2011 APPLY TO ALL PERIODS The Official Rate of Interest is 4% Indicative word count 1,500 words LETTER TO REX Write a letter to Rex explaining the following: Total 15 marks for letter to Rex. Suggested word-count 1,500 words.
These documents must be electronically produced, using Excel and Word, and printed on A4 paper. It must be submitted to the Faculty Office (Room L105) no later than closing time on 26 January 2011. You must keep a duplicate copy of all work submitted for assessment We do not require an electronic copy to be handed in. IMPORTANT NOTE Plagiarism is a serious academic offence that could lead to you failing this unit. Your work should be your own at all times. Further information about what constitutes plagiarism can be found in your Course Guide and the University Student Handbook. If you have any questions about what constitutes plagiarism address these to the Course Director and the unit leader for this unit BEFORE submitting this assignment”.
Rex’s rented properties 2010/11
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