Policy 2
Landowners will have to pay a tax for plots of building land for which building permission has been granted but no work has been carried out and the plot remains empty. This is to avoid “land banking” – keeping land undeveloped until it acquires more value due to manufactured shortage.

Policy 3
The UK government ‘Help to Buy: Equity Loan’ is a scheme that allows buyers of newly built homes to reduce the deposit needed to 5% while keeping mortgage to 75% thanks to a loan by the Government of the remaining 20% of the cost. If buyers stay in their home for at least five years they won’t have to pay any loan fee on the government scheme. The government has also increased the limit of equity loan for London properties to 40% to reflect current property prices.

Policy 4
The government has introduced a three-per-cent stamp duty surcharge that property owners are liable to. Some observers have said that this would push amateur buy-to-let landlords out of the market, as they are less well resourced to cope with the tax change compared to corporate developers. Most of the landlords who might be pushed out of the letting market by this measure are wealthy parents investing for their children’s future or those who have inherited properties.

Policy 5
The government has set up a programme of guarantees to support lending to smaller housebuilders by taking on some of the borrowing risk usually borne by developers in their projects

You graduated as a mechanical engineer five years ago, taking a job as a trainee engineer with a major automotive manufacturer. Since you were not happy with this company, you left three years ago to work for Hallmark, a large UK-based engineering consultancy company with several important offices worldwide. Hallmark commonly contract-out their employees to other companies (many consultancies do this). These often involve Hallmark engineers working for many months (sometimes years) at the other company, forming close working relationships with the company's engineers and other staff, and being party to information and data that are confidential to the company.

Soon after you started at Hallmark, they contracted you to work for PartCo Ltd, a large company that designs and manufactures automotive parts (PartCo often contract with Hallmark for engineers when PartCo has important work that requires extra staff). PartCo is a worldwide organisation and does business with most UK, European and Japanese automobile manufacturers. You joined a group doing relatively routine, but highly demanding, work on clarifying the design details for a new range of constant velocity (CV) joints for front-wheel drives. This required computer-based

engineering simulations of the parts, testing of prototypes, and final assurance of the products before the designs were released for manufacturing.

Whilst you have been doing this, you got a really good idea for a completely new type of CV joint. You have worked on the idea at week-ends and now believe that it could revolutionise vehicle propulsion. You have continued to work privately on this idea after returning to Hallmark to work on other, non-automotive, jobs.

You have told no-one at either PartCo or Hallmark of your private activities on the new CV joints.

Questions

(i) What intellectual property (IP) is involved here?

(ii) Who owns it?

(iii) If you wished to secure and exploit rights to the new CV joint, how would you go about it?

(iv) Could you justify your actions ethically?

1. The spot rate of the US dollar is 70/USD and the three month forward rate is INR 72/USD. Is the rupee trading at discount t or premium?
2. The 90-day interest rate is 1.5% in the US and 4% in India. The current spot exchange rate is INR 70/USD. What will be the 90-day forward rate? (CIP)
3. The current spot rate for the JPY is INR 1.55. The expected inflation is 8% in India and 1.5% in Japan. What is the expected spot rate of the JPY a year hence? (PPP)
4. In India the interest rate on a 1-year loan is 14% and expected inflation is 8%. The expected inflation in Thailand is 10%. What should be the interest rate of a 1-year loan in Thailand? (IFE)
5. What is the implied exchange rate between AED and INR? The spot price is 34,060/10gms in India. How can we explain the discrepancies? The spot rate is INR 18.97/AED.

6. The spot rate is INR 65/USD. And the one year expected spot rate is 70/USD. The expected inflation in India is 10% what is the expected inflation in the US?
7. The annual interest rates in India and the US are 11.43% and 4% respectively. The current exchange rate is INR70/USD and the one year forward rate is INR 75/USD. Where should an Indian investor invest? If the forward rate is INR 76/USD then will your answer change?
8. BI, an Indian multinational company is evaluating an overseas investment proposal. BI is a leading bulk drugs exporter and is considering building a plant in the UK. The project cashflows are given below and the investment costs GBP 100mn. The current spot exchange rate is INR 87.45/GBP. The interest rate in India is 10% and in the UK is 6%. BI expects to earn 20% return on similar project in India. Should BI take up this project?

Samson plc is registered for VAT.

The following information relates to the company’s VAT return for the quarter ended 31 March 2020:

1. Sales invoices totalling £330,000 were issued to VAT registered customers, of which £240,000 were for standard-rated sales and £90,000 were for zero-rated sales.

2. Samson plc offers its standard-rated customers a 5% discount for prompt payment. This discount was taken by 1/3 of the customers.

3. Purchase invoices totalling £154,000 were received from VAT registered suppliers, of which £136,000 were for standard-rated purchases and £18,000 for zero-rated purchases.

4. Standard-rated expenses amounted to £28,000. This includes £3,900 for entertaining UK customers.

5. On 15 March 2020, the company wrote off irrecoverable receivables of £4,000 and £1,680 in respect of invoices that were due for payment on 10 August 2019 and 5 November 2019 respectively.

6. On 11 January 2020, Samson plc purchased machinery for £24,000 and sold office fittings for £8,000. Input VAT had been claimed when the office fittings were originally purchased.
7. On 1 March 2020, Samson plc purchased a motor car costing £28,400 for the use of its finance director. The finance director is provided with free petrol for private mileage, and the cost of this is included in the standard-rated expenses in note (iv). The relevant quarterly scale charge is £432. Both figures are inclusive of VAT.

Unless stated otherwise, all of the figures above are exclusive of VAT.

YOU ARE REQUIRED TO:

1. Calculate the VAT payable by Samson plc for the quarter ended 31 March 2020 and state the payment due date.

2. Samson plc is experiencing cash-flow difficulties. The company submitted its VAT return and paid the VAT due for the quarter ended 31 December 2019 on 15 March 2020.

State the consequences if Samson plc does not submit the return for the quarter ended 31 March 2020 until 25 May 2020.

(maximum word count 80 words)

TOTAL 20 MARKS

UK TAX

CASE ANALYSIS

Mars Inc.: merger of the European food, pet care and confectionery divisions

Mars Inc. is a diversified multifunctional company whose primary products include foods, petcare, confectionery, electronics and drinks. Owned and controlled by the Mars family, this US giant is one of the world’s biggest private companies, but also one of the most secretive. Mars’ decision in January 2000 to merge its food, pet care and confectionery divisions across Europe – and eventually with headquarters in the UK – has split the marketing industry. The most well-known brands within the three divisions are:

• Foods: Uncle Ben’s rice and sauces;
• Pet care: Whiskas, Pedigree;
• Confectionery: M&Ms, Snickers, Milky Way, Mars Bar.

Mars UK says the decision to pool the businesses was taken to strike at the company’s international competitors in food and confectionery, such as Nestlé and Unilever. The move also coincides with plans to create a single European market and highlights the company’s belief that its consumers’ needs are the same across the continent. However, the combination of food and confectionery with pet care is not clear to all industry observers. One industry analyst made the comment: Generally speaking, Mars is doing the right thing by merging divisions to squeeze profits out of them. Before the advent of the euro it was acceptable to run separate companies in different European countries but not anymore. Another analyst said: ‘I can’t imagine it marketing all three sides of the business together. They’re too different.’ The only visible benefit appears to be an improvement in distribution. Tastes across European markets are very different, whether you’re selling products for animals or people It’s all very well Mars saying it will tackle competitors such as Nestlé and Unilever, but they are only rivals in food and confectionery. If Mars starts laying down too many controls by merging all its businesses – and therefore also its marketing and management strategies – it may streamline communications, but could lose the creativity available in different regions.

Questions:

1. Discuss the two views of organizing Mars’ European activities.

2. Did Mars Inc. do the right thing in your opinion?

Identify and discuss the most important changes in the class structure of British society, and in the relationship between social classes, during the period covered by the course. Show how these social changes—for example, the emergence of new classes, the decline of older ones--were related to the profound changes in the British economy during this period, paying particular attention to such factors as agricultural improvement, industrialization, population growth, technological innovation and urbanization.

Problem 6.45A a-c

Alice Oritz is the advertising manager for Value Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $25,830 in fixed costs to the $262,605 currently spent. In addition, Alice is proposing that a 10% price decrease ($35 to $31.50) will produce a 20% increase in sales volume (20,500 to 24,600). Variable costs will remain at $14 per pair of shoes. Management are impressed with Alice’s ideas but are concerned about the effects that these changes will have on the break-even point and the margin of safety.

Calculate the current break-even point in units, and compare it with the break-even point in units if Alice’s ideas are used.

Calculate the margin of safety ratio for current operations and after Alice’s changes are introduced.

Prepare CVP income statements for current operations and after Alice’s changes are introduced.

Would you make the changes suggested?

Analysis of Financial Statements: For this milestone, you will continue to develop material to be included in your financial analysis paper. You will need to research AMAZON and obtain the last few years (at least two) of financial statements (information that is available to the public online) in order to answer the following questions: A. Based on the information that you have gathered, explain the changes in financial ratios. Has anything changed in the few years of financial statements that you have obtained? i. What are the reasons for these changes? B. Based on the information you have gathered, analyze the changes in the financial reports regarding cash. Be sure to examine the statement of cash flows. i. What are the reasons for these changes? C. Based on the information you have gathered, analyze the changes in the financial reports regarding the account balance. i. What are the reasons for these changes? D. Describe the type of valuation method that AMAZON uses and explain why it uses this method. i. What are the benefits of this method? E. Based on industry trends, future plans of AMAZON, and the information you have gathered, predict how AMAZON will perform in the following year compared to competitors.