Essay Question
A) Taxation in the United Kingdom is largely concerned with fault lines between opposite
concepts and opposite circumstances. Please identify two pairs of opposites, one based on a concept and one based on a circumstance, and discuss the extent to which the above proposition is true and, if true, the extent to which this approach to taxation is effective for a modem taxation system.
B) As a young boy, Graham John Walmsley (`Graham’) was fascinated by motorcars. After university, Graham went into business with his uncle (`Tom’) as a mechanic. Soon, however, Graham started to do work for his friends. To start with he did not receive anything for his work, but gradually his friends started to give him CDs and other very inexpensive items. Gradually, Graham built up quite a reputation amongst his friends and his friends’ friends for his skill as a mechanic; and Tom was delighted with Graham’s hard work.
Some three years after Graham started working for Tom, a national chain of garages (the ‘national chain’) approached Tom with a proposition: first, that Tom would cease trading on his own account and would become an employee of the national chain; second, that the national chain would pay Tom a very significant amount of money for his business; and, third, that Graham would also be taken on as an employee of the national chain. Tom was very keen on the idea, but Graham was not keen to work for a large organisation as a mechanic.
Graham was able to speak to the national chain’s negotiator (Alice). Graham told Alice that he, Graham, would not work for the national chain but would work on his own. After several months of discussions, it was agreed that (i) Graham would leave Tom’s business without any compensation from Tom; (ii) Tom would sell his business to the national chain; and (iii) the national chain would pay Graham quite a large amount of money not to work on his own within a radius of twenty miles from Tom’s business premises for a period of five years. The deal was implemented, and Graham started to contact his friends, and his friends’ friends to announce that he would be moving to a different part of the country, where he planned to start a new business.
Graham did move, but he went to work for a bank so as to learn about business administration and finance, with a view to setting up his own motor engineering business after a few years of experience with the bank. Whilst working for the bank, the Revenue wrote to Graham as part of an investigation into the deal struck between the national chain and Tom. As a result of those investigations, the Revenue sent Graham an assessment to tax on the sum which he had received from the national chain. In this assessment, it was unclear how the Revenue had characterised the payment.
Graham consulted a tax adviser and explained the situation as he understood it, including the point that for obvious reasons he, Graham, had never prepared accounts. After several months of work, the tax adviser informed Graham that the tax court had rejected Graham’s challenge to the assessment. Graham wants to take his case to the next level of tax court. What advice should the tax adviser give to Graham on all the tax and tax related issues raised, and why?
C) Please analyse, compare and contrast the relationship between the issues in Part (A) and the issues in Part (B): identifying similarities and discrepancies between the issues.
Criteria’s for Essay
Parts (A) (B) and (C) above comprise the whole question. You are required to respond to the whole question by preparing a single, coherent essay.
Although marks are not awarded separately for each of the three parts, your overall mark for this essay will be compromised if you fail to answer each part effectively.
The essay must be presented in Times New Roman, font size 12, and with standard margins (2.54cms top and bottom, and 2.54cms left and right), please remember to number the pages.
Make sure to use footnotes and to include a bibliography at the end of the essay.
Please use double line spacing for the body of the essay and single line spacing for footnotes and bibliography.
