Sally Forth lives in the UK and is a marketing manager for a large corporation

Case Study: Taxation
Sally Forth lives in the UK and is a marketing manager for a large corporation. Unfortunately, the company she works for has asked for members of staff to volunteer for redundancy in a re-structuring programme. Should she volunteer, Sally would receive a 50,000 lump sum from her employer. Sally would then use the money to start her own business as a marketing consultant. She has a lot of contacts in the industry and believes that she could build a successful business, although this might take several years. One of her concerns is what might happen if she were to secure a job with another company. Another is what would happen if she wanted to sell the business or just cease trading in the future.
What she is not very sure of is the UK taxation implication of starting her own business. Friends have said that she may have to register with Companies House and that as long as she does everything in cash, she will not have to worry about VAT or any other taxes. Another friend has said that if Sally starts a limited company, she will not pay tax, as the company will pay it for her, but, she may have to pay National Insurance.
Assignment briefing
Required
Prepare a comprehensive written report, in Microsoft Word, for Sally Forth that addresses the personal taxation consequences of her commencing self-employment as well as the general taxation principles and considerations involved with her running a business and its subsequent development over time. This will include aspects of Capital Gains, Inheritance and Corporation tax as they may apply to Sally in the future should she wish to dispose of her business. Your report must include the subjects of National Insurance and VAT and how they will impact in this instance. The administration and penalty regime for relevant taxes must also be examined. Wherever possible, your discussion should include worked examples to illustrate principles, offer guidance and inform decision-making.
You will be expected to review and research the appropriate chapters in the Set Text, on-line sources and review
other texts & journals in the Hive library to develop your lecture/seminar knowledge and understanding.
Learning Outcomes
1.Explain and appreciate the scope, operation and administration of the tax system as it applies to
- individuals
- and companies.
5.Investigate the VAT system and make decisions regarding registration for individuals and companies.
6.Understand how National Insurance complements the Income tax system and perform calculations for individuals and
companies.
Assessment Criteria
The following specific criteria will be used for this work:
1.Demonstration an understanding of the scope, operation and administration of the tax system and how it applies to
- individuals
- and companies
2.Advise how VAT will impact the business or individual
3.Understand how the National Insurance system complements the Income Tax system and demonstrate this with examples