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Taxation Assignment - Questions and Answers

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Added on  2020-12-09

Taxation Assignment - Questions and Answers

   Added on 2020-12-09

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Taxation
Taxation Assignment - Questions and Answers_1
Table of ContentsINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1Advice to Mr. Desai....................................................................................................................1QUESTION 2...................................................................................................................................2Tax evasion and avoidance.........................................................................................................2QUESTION 3...................................................................................................................................3Advice for expenditures and incomes and calculation of trading profits....................................3QUESTION 4...................................................................................................................................5Value added tax...........................................................................................................................5CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................7
Taxation Assignment - Questions and Answers_2
INTRODUCTIONTaxation is related to a person who is liable to pay tax on the income and wealth. Itimplied by legal authority of a country who is responsible to introduce different rules andregulations related to tax. It is applied on all type of income of individuals including capital gain,salary, house property, other sources and business and profession (Brownlee, 2016). Everyperson after reaching to a certain level of income have to pay tax to the government so that allthe social activities can be operated by them effectively as legal authorities have only one sourceof income which is tax. Under this project report a trainee tax managers is provided a client MrDesai who has a vocation of collecting antiques and restoring. The charted accountants firm hasasked the managers to prepare report by assessing all the issues of client.QUESTION 1Advice to Mr. DesaiTrade refers to the process of buying or selling goods and services and it requires manualskills and special training to trade. Vocation is also considered as a trade as various assets arepurchased and sold by individuals in order to generate profit. It is a hobby of collecting variousthings and than selling them for earning profit some people thinks that it is not a trade as it is notdone on regular basis (Hatfield, 2015). According to HMRC trade can be defined as a activity in which different assets, goodsand services are bought and sold by individuals for the purpose of getting higher amount ofprofits. Vocation is also a type of trade as it is concerned with the buying and selling activities ofdifferent type of assets. From the above statement it can be analysed that Mr Desai's vocation canbe termed as a trade as various antiques are collected and restored by him and all of therm aresold for the purpose of generating profits. Following six types of badges can support the abovementioned statement:Profit seeking motive: If assets are purchased and sold for the purpose of generatingprofit than it will be considered as trade. As various transactions are repeated by Mr Desai thatare of same nature hence, it has been analysed that profits were trading profits and will betaxable as such type of profits.1
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