Page 20 - CIMA OCS Workbook February 2019 - Day 2 Tasks

CIMA FEBRUARY 2019 – OPERATIONAL CASE STUDY

EXERCISE THREE (TAXATION)

TRIGGER.
You have received the following email from Ping Bennett:

From: Ping Bennett (Finance Director)
To: Finance Officer
Subject: Taxation issues

I’ve been reviewing some of our expenses and have identified a couple of issues I’d like you to
follow up for me.

1 – Expense claims
Expense claims from our sales and installation teams seem to have increased in recent months. In
addition, although we have a standard expense claim form for employees to use, it does not
include analysis of VAT (sales tax) and nor do employees always submit receipts to support their
claims.
Please draft a note that I could circulate to the sales and installation teams to explain why there
now needs to be:

a) a distinction between claiming for subsistence and claims for entertaining
b) a separate analysis of VAT (sales tax) within the expense form, and
c) why receipts are needed to support expense claims.

2 – Political donation
Trigg Adventure is thinking of making a donation to the political party that currently controls the
majority of local government councils and departments. The objective of this is to raise the profile
of Trigg Adventure with local government decision-makers, particularly in the context of the
launch of the recent FITKIDS initiative and to make a positive contribution to the local community.

Could you summarise the tax implications of making such a donation, and also comment on any
ethical implications of making such a donation?

I appreciate that this request is made at short notice, but I would like to circulate this information
to employees as soon as possible.

Thanks
Ping

TASK
Using the information provided in the pre-seen material, reply to Ping’s email explaining the tax-
related and other issues as requested.

(Time Allowed: 35 minutes)

42 KAPLAN PUBLISHING