THE CHARTERED INSTITUTE OF TAXATION
APPLICATION AND PROFESSIONAL SKILLS
Taxation of Individuals
May 2022
TIME ALLOWED
3 HOURS 30 MINUTES
• In order to secure a pass in this exam, you will be required to demonstrate competence in each of
three skills.
You will be assessed across your answer as a whole for Structure. A pass or fail grade will be
awarded.
You will be assessed for competence in a number of broad topics for the following skills:
➢ Identification and Application
➢ Relevant Advice and Substantiated Conclusions
For each topic for each of these two skills, a grade will be awarded. The grades for those topics will
be weighted and averaged to produce a final grade for each skill of 0, 1, 2, 3 or 4. A grade of 3 or 4
is required to demonstrate competence.
• All workings should be shown and made to the nearest month and pound unless the question specifies
otherwise.
• Candidates who answer any law elements in this paper in accordance with Scots law or Northern
Ireland law should indicate this where relevant.
• Scots law candidates may provide answers referring to Land and Buildings Transaction Tax rather
than Stamp Duty Land Tax.
• Unless otherwise indicated by the provision of additional information in the question, you may assume
that 2021/22 legislation (including rates and allowances) continues to apply for 2022/23 and future
years. Candidates answering by reference to more recently enacted legislation or tax cases will not
be penalised.
• You must type your answer in the space on the screen as indicated by the Exam4 guidance.
,You are a tax manager in a firm of Chartered Tax Advisers.
Your firm’s clients, Justin and Jenny Liu, have recently attended a meeting with your tax partner, Amira
Aslam. At the meeting, they explained that they are planning to leave the UK permanently and return to
live in Ruritania. Jenny will be returning to Ruritania shortly; Justin will remain in the UK for now but
intends to join Jenny in Ruritania when he retires in 2024.
Amira has asked you to prepare a report to advise Justin and Jenny on the UK tax implications of their
plans and recommending actions they should take to arrange their affairs tax efficiently.
The following exhibits are provided to assist you:
EXHIBIT A: File note of a meeting between Amira Aslam, Jenny Liu and Justin Liu
EXHIBIT B: Email from Justin Liu
EXHIBIT C: Pre-seen information
Requirement:
Prepare a report to Jenny and Justin advising on the UK tax implications of their plans and
recommending actions they should take to arrange their affairs tax efficiently.
Continued
Page 2 of 7 APS IND
,Continuation
EXHIBIT A
File note of a meeting between Amira Aslam, Jenny Liu and Justin Liu
Present: Amira Aslam
Jenny Liu
Justin Liu
Date: 25 April 2022
Jenny’s employment
Jenny has given notice to her current employer, for whom she has worked full-time in the UK for several
years. Her last day at work will be 30 June 2022. She is considering two job offers, either of which
would start on 1 July 2022:
1) A UK development agency has offered her a nine-month contract working full-time as a nurse in
Ruritania for a salary of £55,000 per annum.
2) A hospital in Ruritania has offered her a full-time permanent contract in Ruritania, earning a
salary which equates to £50,000 per annum.
If the temporary contract is taken, Jenny intends to remain in Ruritania and find further work there after
the nine-month contract ends, rather than returning to the UK.
Justin’s employment
Justin will remain in the UK for the time being, and will continue to work full-time at Industrious Ltd,
where he receives an annual salary of £100,000. He will retire in just under two years on 31 March
2024, at which time he will join Jenny in Ruritania.
Throughout the period until Justin joins Jenny in Ruritania, Justin will spend approximately 50 days per
year in Ruritania visiting Jenny, and Jenny will spend approximately 50 days per year in the UK visiting
Justin. Neither of them expects to carry out any work while visiting the other.
Gift to Mary
Justin would like to give either his Industrious Ltd shares or Unit 4, Grey Building to his daughter, Mary,
to provide her with additional income. It is anticipated that either the Industrious Ltd shares or Unit 4,
Grey Building will provide an annual income of £20,000 for the foreseeable future. Mary is single, lives
in the UK and works full-time earning a salary of £30,000 per annum.
Investment income
Justin and Jenny would like to ensure that their assets are owned as tax-efficiently as possible. With this
in mind, Justin is considering transferring assets to Jenny so that the income from them is taxed on her.
The assets he is considering transferring are:
1) Either his Industrious Ltd shares or Unit 4, Grey Building (whichever of these is not transferred to
Mary); and
2) 53 Red Street. Justin and Jenny intend to sell this property in two years’ time when Justin retires,
to help fund their life in Ruritania.
Continued
Page 3 of 7 APS IND
, Continuation
17 Yellow Road, London
Jenny will retain ownership of the property. After they have left the UK, Justin and Jenny intend to keep
the property and stay in it whenever they return to visit family and friends in the UK. It will remain empty
at other times.
Ruritanian tax
Ruritania charges a 10% flat rate of tax on employment income, a 30% flat rate of tax on all investment
income (including property income and dividends), no Capital Gains Tax and no Inheritance Tax.
The double tax agreement between the UK and Ruritania follows the OECD model treaty.
Neither Justin nor Jenny owns any assets in Ruritania. They will separately seek advice relating to
Ruritanian tax from a qualified Ruritanian tax adviser.
Justin will provide us with details of the current value of their assets, plus the value of Unit 4, Grey
Building on 5 April 2019 and the two residential properties on 5 April 2015.
Continued
Page 4 of 7 APS IND
APPLICATION AND PROFESSIONAL SKILLS
Taxation of Individuals
May 2022
TIME ALLOWED
3 HOURS 30 MINUTES
• In order to secure a pass in this exam, you will be required to demonstrate competence in each of
three skills.
You will be assessed across your answer as a whole for Structure. A pass or fail grade will be
awarded.
You will be assessed for competence in a number of broad topics for the following skills:
➢ Identification and Application
➢ Relevant Advice and Substantiated Conclusions
For each topic for each of these two skills, a grade will be awarded. The grades for those topics will
be weighted and averaged to produce a final grade for each skill of 0, 1, 2, 3 or 4. A grade of 3 or 4
is required to demonstrate competence.
• All workings should be shown and made to the nearest month and pound unless the question specifies
otherwise.
• Candidates who answer any law elements in this paper in accordance with Scots law or Northern
Ireland law should indicate this where relevant.
• Scots law candidates may provide answers referring to Land and Buildings Transaction Tax rather
than Stamp Duty Land Tax.
• Unless otherwise indicated by the provision of additional information in the question, you may assume
that 2021/22 legislation (including rates and allowances) continues to apply for 2022/23 and future
years. Candidates answering by reference to more recently enacted legislation or tax cases will not
be penalised.
• You must type your answer in the space on the screen as indicated by the Exam4 guidance.
,You are a tax manager in a firm of Chartered Tax Advisers.
Your firm’s clients, Justin and Jenny Liu, have recently attended a meeting with your tax partner, Amira
Aslam. At the meeting, they explained that they are planning to leave the UK permanently and return to
live in Ruritania. Jenny will be returning to Ruritania shortly; Justin will remain in the UK for now but
intends to join Jenny in Ruritania when he retires in 2024.
Amira has asked you to prepare a report to advise Justin and Jenny on the UK tax implications of their
plans and recommending actions they should take to arrange their affairs tax efficiently.
The following exhibits are provided to assist you:
EXHIBIT A: File note of a meeting between Amira Aslam, Jenny Liu and Justin Liu
EXHIBIT B: Email from Justin Liu
EXHIBIT C: Pre-seen information
Requirement:
Prepare a report to Jenny and Justin advising on the UK tax implications of their plans and
recommending actions they should take to arrange their affairs tax efficiently.
Continued
Page 2 of 7 APS IND
,Continuation
EXHIBIT A
File note of a meeting between Amira Aslam, Jenny Liu and Justin Liu
Present: Amira Aslam
Jenny Liu
Justin Liu
Date: 25 April 2022
Jenny’s employment
Jenny has given notice to her current employer, for whom she has worked full-time in the UK for several
years. Her last day at work will be 30 June 2022. She is considering two job offers, either of which
would start on 1 July 2022:
1) A UK development agency has offered her a nine-month contract working full-time as a nurse in
Ruritania for a salary of £55,000 per annum.
2) A hospital in Ruritania has offered her a full-time permanent contract in Ruritania, earning a
salary which equates to £50,000 per annum.
If the temporary contract is taken, Jenny intends to remain in Ruritania and find further work there after
the nine-month contract ends, rather than returning to the UK.
Justin’s employment
Justin will remain in the UK for the time being, and will continue to work full-time at Industrious Ltd,
where he receives an annual salary of £100,000. He will retire in just under two years on 31 March
2024, at which time he will join Jenny in Ruritania.
Throughout the period until Justin joins Jenny in Ruritania, Justin will spend approximately 50 days per
year in Ruritania visiting Jenny, and Jenny will spend approximately 50 days per year in the UK visiting
Justin. Neither of them expects to carry out any work while visiting the other.
Gift to Mary
Justin would like to give either his Industrious Ltd shares or Unit 4, Grey Building to his daughter, Mary,
to provide her with additional income. It is anticipated that either the Industrious Ltd shares or Unit 4,
Grey Building will provide an annual income of £20,000 for the foreseeable future. Mary is single, lives
in the UK and works full-time earning a salary of £30,000 per annum.
Investment income
Justin and Jenny would like to ensure that their assets are owned as tax-efficiently as possible. With this
in mind, Justin is considering transferring assets to Jenny so that the income from them is taxed on her.
The assets he is considering transferring are:
1) Either his Industrious Ltd shares or Unit 4, Grey Building (whichever of these is not transferred to
Mary); and
2) 53 Red Street. Justin and Jenny intend to sell this property in two years’ time when Justin retires,
to help fund their life in Ruritania.
Continued
Page 3 of 7 APS IND
, Continuation
17 Yellow Road, London
Jenny will retain ownership of the property. After they have left the UK, Justin and Jenny intend to keep
the property and stay in it whenever they return to visit family and friends in the UK. It will remain empty
at other times.
Ruritanian tax
Ruritania charges a 10% flat rate of tax on employment income, a 30% flat rate of tax on all investment
income (including property income and dividends), no Capital Gains Tax and no Inheritance Tax.
The double tax agreement between the UK and Ruritania follows the OECD model treaty.
Neither Justin nor Jenny owns any assets in Ruritania. They will separately seek advice relating to
Ruritanian tax from a qualified Ruritanian tax adviser.
Justin will provide us with details of the current value of their assets, plus the value of Unit 4, Grey
Building on 5 April 2019 and the two residential properties on 5 April 2015.
Continued
Page 4 of 7 APS IND
