1 Advice Mr Desai's whether his vocation can be termed as trading, using the six badges of trade and any case law to support answer.
2 a) Explain the difference between Tax evasion and Tax avoidance to Mr Desai and their legal consequence's- use Journal or recent article to support your work.
b) Discuss any measure HMRC can take if any. to counteract any abusive arrangement.
3 Mr Desai has decided to setup a small antiques business as a sole trader. He started trading on the 1 January 2017, preparing accounts to 31 December yearly. The business made a net profit of £12,100 for the year to December 2017 The following appears in the income and Expenditure statement for the year end 31 December 2017: Expenditure
I. The sum of £1500 for obtaining a loan is included in the Income and expenditure statement.
II. £4,200 was spent on installing new windows in a recently acquired factory, which had been badly damaged in a fire shortly before its acquisition by Mr Desai.
III. A sum of £250 fine paid in respect of Mr Desai's son, who works part-time in the business.
IIII. Depreciation charge of £3,500 is included in the income and expenditure. These relate to newly acquired cars.
V. A legal fees of £286 is included in the trading profit. This is in respect of renewal of a twenty —one year lease of the new office premises.
4 Mr Desai also needs advice about his trading activities in relation to VAT. He currently is not registered for VAT. However, his business is growing and he has recently won a contract worth £90,000 on 1 November 2017 Desai sales from the last months of trading are:
August 2017 £20,000
September 2017 £40,000
November 2017 £105,000
December 2017 £70,000
All the above figures are stated exclusively of value added tax. Desai only supplies and all the businesses suppliers are standard rated. Mr Desai allows his customers 45 days credit when paying for service and he is concerned that some of its customer will default on their payments. Mr Desai pays its suppliers invoices as soon as they are received Mr Desai is currently not registered for Value Added and his neighbour has mentioned Flat —rate scheme for small businesses to him and he will like to know more about it. Required:
a) Explain giving reasons the date Desai is required to register for vat and by when it was required to notify HMRC.
b) State how and when Desai will have to submit its quarterly VAT liability.
c) Advice Mr Desai the benefit of the benefit of Flat —scheme for businesses.
d) Advice Mr Desai what he can do if his customers default in their payment?