Series: NOV 2021

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  • 16 Marks

TAX – Nov 2021 – L2 – Q7 – Tax Administration

Explanation of five different aspects of tax administration that TAXPRO MAX can handle.

Tago Nigeria Limited was incorporated in 2009 as a trading company. It supplies
office furniture, equipment and other office materials to end users.

Due to the favourable business climate in recent years, the company achieved a
gross turnover of N120,000,000 in 2020. The directors were impressed by the profits
posted by the company, hence the decision to computerise the accounting system of
the company.
You were appointed the tax consultant to the company in 2018. You are aware that
in 2006, the Federal Inland Revenue Service (FIRS) deployed the first tax portal
(Webportal) to automate and streamline taxpayer‟s registration and other tax
administration system (ITAS) known as SIGTAS. This was implemented though its
deployment was stalled.

Following the enactment of the Finance Act, 2020, the Federal Inland Revenue
Service is empowered to automate filing of tax returns and payment processes.
You attended a seminar organised by the Federal Inland Revenue Service in June
2021, to inform tax consultants of the adoption of a locally developed tax
management solution known as TAXPRO MAX. The FIRS insisted that manual filings
of tax returns would no longer be allowed.
At a meeting held with the Managing Director of Tago Nigeria Limited, you intimated
him of the tax development. He was worried that there could be a delay in filing of
tax returns for the year ended December 31, 2020, more so when taxpayers are yet to
be fully aware of this new development.

Required

Explain to the management FIVE different aspects of tax administration that the tax management solution known as TAXPRO MAX can handle.

 

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  • 15 Marks

TAX – Nov 2021 – L2 – Q6 – Value Added Tax (VAT)

Explanation of when goods and services are deemed to be supplied in Nigeria according to section 2 of the VAT Act.

Taxable supplies of goods and services are those listed under the First Schedule of
the Value Added Tax Act Cap VI for 2004 (as amended). Essentially, these are goods
and services liable to value added tax at the prescribed rate.
Required:
Explain when goods and services shall be deemed to be supplied in Nigeria in
accordance with section 2 of VAT Act (as amended).

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  • 15 Marks

TAX – Nov 2021 – L2 – Q5 – Companies Income Tax (CIT)

Explanation of documents required for tax registration, time lag for filing tax returns, and penalties for late filing of returns.

QUESTION 5
The Companies Income Tax Act Cap C21 LFN 2004 (as amended) empowers the
Federal Inland Revenue Service to assess the income of corporate organisations.
Corporate organisations are required to file tax returns within a specified period of
time to the relevant tax authority.
Required:
a. Explain the documents/information required to be forwarded to the relevant tax
authority when registering with the nearest integrated tax office. (5 Marks)
b. State the time lag for filing the first set of returns and subsequent ones.
(5 Marks)
c. State the penalty for late filing of tax returns on the due dates. (5 Marks)
(Total 15 Marks)

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  • 5 Marks

TAX – Nov 2021 – L2 – Q4b – Tax Incentives and Reliefs

Explanation of the rules governing loss relief for companies, including carry forward, loss limitation, and cessation rules.

Explain FIVE rules governing loss relief for companies.

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  • 15 Marks

TAX – Nov 2021 – L2 – Q4a – Companies Income Tax (CIT)

Computation of income tax payable for Ajani-Ogun Ventures Limited from 2018 to 2021 years of assessment.

Ajani-Ogun Ventures Limited was incorporated on February 1, 2012, and commenced business on September 1, 2013. The company makes up accounts to August 31, every year. The following additional information is provided:

  1. Adjusted (loss)/profit:
    • Year ended August 31, 2017: (N95,000)
    • Year ended August 31, 2018: N55,000
    • Year ended August 31, 2019: N35,000
    • Year ended August 31, 2020: N65,000
  2. Capital Allowances for each year of assessment:
    • Year ended August 31, 2018: N6,500
    • Year ended August 31, 2019: N5,000
    • Year ended August 31, 2020: N4,200
    • Year ended August 31, 2021: N4,000

The Finance Director was worried that the tax officials would soon conduct a tax
audit of their financial transactions and he wanted to know the tax liabilities
payable to the Federal Inland Revenue Service for the relevant assessment years.
During the year ended August 31, 2020, the company achieved a revenue of
N20,000,000.

Required:
a. Compute the income tax for 2018 to 2021 years of assessment, taking into consideration the provisions of the Finance Act, 2019. Ignore minimum tax computation. (15 Marks)

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  • 5 Marks

TAX – Nov 2021 – L2 – Q3c – Value Added Tax (VAT)

Explanation of the merits and demerits of Value Added Tax (VAT) as a consumption tax.

Explain the merits and demerits of VAT

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  • 6 Marks

TAX – Nov 2021 – L2 – Q3b – Value Added Tax (VAT)

Explanation of penalties associated with VAT non-compliance including failure to register, failure to notify of address changes, and failure to submit returns.

Explain the penalties associated with the following:

i. Failure to register for VAT return (2 Marks)
ii. Failure to notify the FIRS of change of address or cessation of trade or business (2 Marks)
iii. Failure to submit VAT returns (2 Marks)

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  • 9 Marks

TAX – Nov 2021 – L2 – Q3a – Value Added Tax (VAT)

Calculation of total VAT payable by Adegboyega Enterprises to the Federal Inland Revenue Service (FIRS) for product sales.

Adegboyega Enterprise is a manufacturing outfit based in Jankara, Lagos State. In 2020, the company sold its vatable product to a wholesaler, Ikeja Venture, for N3,500,000. The wholesaler sold the products to a retailer, Mrs. Adeosun, for N4,900,000, who finally sold it to consumers for N6,300,000 (VAT inclusive). Assume there was no closing inventory at each stage of the transaction.

Required:
a. Compute the total VAT payable to the Federal Inland Revenue Service by Adegboyega Enterprises on the transactions stated above.

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  • 20 Marks

TAX – Nov 2021 – L2 – Q2 – Companies Income Tax (CIT)

Computation of interest deductible under section 24 of CITA 2004 and treatment of excess interest for XYZ Limited.

XYZ Limited was incorporated on August 31, 2012, and it commenced business on May 31, 2013. Diki (Malaysia) Limited is its subsidiary in Malaysia. An extract of the financial statements of XYZ Limited for the year ended December 31, 2020, revealed the following:

Assessable profit: N2,000,000

Interests and depreciation deducted before arriving at the assessable profit are:

  • Interest on loan paid to Diki (Malaysia) Limited: N1,050,000
  • Interest on loan paid to other creditors: N1,000,000
  • Depreciation: N400,000

It was discovered that N450,000 of the loan paid to other creditors was in respect of a loan obtained to generate tax-exempt profits.

The Managing Director of XYZ Limited has asked you as a tax consultant to explain the provisions of section 24 of CITA 2004 (as amended) and the Seventh Schedule in respect of the interest deductible by a Nigerian company.

Required:
a. Compute the interest deductible in the relevant assessment year. (16 Marks)
b. Explain how the excess interest not deducted in the relevant assessment year would be treated. (4 Marks)

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  • 30 Marks

AX – Nov 2021 – L2 – Q1 – Personal Income Tax (PIT)

Calculation of personal income tax liability for two job offers and providing advice on the offer that yields a higher income after tax.

Miss Opeyemi Olunba is a young engineer who has been working in an oil sector for
over 5 years. She currently earns a gross salary of N10,000,000 per annum. She
recently attended two interviews for a new job at Joke Oil & Gas in Rivers State and
Dabiri Hotels & Suite in Lagos State.
She has been called by the two companies to assume office on April 1, 2021. The
following salaries and allowances were offered by the two companies:

Additional information:

  1. If Miss Opeyemi accepts the offer from Joke Oil & Gas, she will rent out her Lagos apartment for N20,000,000 per annum but will need a loan of N12,000,000 at 20% interest to modify the apartment.
  2. She will pay rent of N5,000,000 in Port Harcourt if she relocates.
  3. She maintains her child, a student at St. John University,
  4. She also supports her parents.
  5. She pays a life assurance premium of N5,000,000 annually.
  6. Her employers will deduct contributions for the National Housing Fund (N5,000,000) and Pension Fund (N3,000,000).
  7. She also pays National Health Insurance Premium (N1,000,000).

Required:

a. Compute Miss Opeyemi’s personal income tax liability for the relevant year of assessment for both offers.
b. Advise her on which employment will give her a higher income after tax.

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  • 20 Marks

BL – Nov 2021 – L1 – SB – Q4 – Agency Law

Examining corruption, money laundering reporting, electronic fraud, and duties of agents.

a. Adamu, a public officer whose duties relate to the administration of justice, was caught on camera corruptly requesting money from a person with a view to avoiding his duties to favor that person.

Required:

i. Under the Criminal Code, what offence could Adamu be charged for and what punishment is he liable to if convicted? (2 Marks)
ii. What would be Adamu’s punishment on conviction if his duties did not relate to the administration of justice? (2 Marks)

b. Thomas carried out a series of transactions on his bank account involving a frequency considered by the bank manager, Alhaji Adeyemo, to be unjustifiable or unreasonable. Adeyemo reported the transactions to the Economic and Financial Crimes Commission, leading to the interrogation of Thomas. Thomas has now filed a civil action for defamation against Alhaji Adeyemo.

Required:

Advise Alhaji Adeyemo on possible liability for the action and his possible defence. (4 Marks)

c. George, who is the chief accountant of Digital Supermarkets, has reasons to believe that certain online lodgments into the supermarket’s bank account by one of the salesgirls were highly suspicious.

Required:

i. What steps should George take as the accountant? (2 Marks)
ii. Explain briefly what you understand by ‘electronic fraud’. (2 Marks)

d. Brenda, an agent who had instructions to sell her principal’s house in the open market, bought the house for herself using her brother as a front without informing the principal.

Required:

State TWO duties Brenda has breached as an agent. (2 Marks)

e. Ngozi retains part of the goods he was instructed to sell as an agent on the ground that the principal has refused to indemnify him for reasonable expenses incurred in the course of carrying out the agency.

Required:

State the condition under which Ngozi, as an agent, could lawfully retain the goods. (2 Marks)

f. Juliet is an officer of an auctioneer company with instructions to auction properties belonging to Adams, but the warehouse handlers displayed goods belonging to Mathias in error. Mathias has brought a suit against Juliet for negligence.

Required:

i. Advise Juliet on the defence or defences available to her, explaining briefly the rule of law for your advice. (2 Marks)
ii. State TWO necessary ingredients which must be proved by a plaintiff to succeed in an action for negligence. (2 Marks)

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  • 20 Marks

BL – Nov 2021 – L1 – SB – Q3 – Corporate Governance

Advising on breach of contract in a pharmaceutical company's vaccine offer and differentiating between contracts under seal and simple contracts.

a. A pharmaceutical company advertising its newly developed vaccine made an offer of N1,000,000.00 (One million naira) to anyone who contracted the disease after taking the vaccination administered freely. Daniel accepted the offer, took the vaccine of his own free will, and contracted the disease. The pharmaceutical company has failed to pay him the one million naira.

Required:
Advise Daniel if his action for breach of contract would succeed or fail, giving reasons for your advice. (5 Marks)

b. Explain the difference between a contract under seal and a simple contract. (5 Marks)

c. Promoters usually enter into a contract on behalf of a proposed company.

Required:
Explain the means of validating a pre-incorporation contract and when it becomes invalid. (6 Marks)

d. Ethical codes are codes adopted by professional bodies for differentiating between right and wrong conduct in the performance of members’ professional duties.

Required:
State FOUR objectives of ethical codes. (4 Marks)

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  • 20 Marks

BL – Nov 2021 – L1 – SB – Q2 – Company Law

Identifying torts affecting economic interests and explaining company securities and the role of a court-appointed receiver.

a. Torts have categories.

Required:
State FOUR categories of tort that affect economic interest. (4 Marks)

b. Chief Afeez is the chairman and majority shareholder of Afeez Nigeria Limited which has won a contract of N500 million that is much beyond the capacity of Afeez Nigeria Limited. Chief Afeez decides to raise the capital for the company by issuing shares and inviting friends to acquire shares in the company as well as issuing debentures.

Required:
Explain briefly FOUR of the following:

i. Company securities
ii. Debentures
iii. Share capital
iv. Preference shares
v. Shareholder (12 Marks)

c. You are a court-appointed receiver of a company with several persons, including debenture holders, having interests in its assets.

Required:
Explain the step you should take in determining how the proceeds of the receivership are to be distributed. (4 Marks)

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  • 20 Marks

BL – Nov 2021 – L1 – SB – Q1 – Nigerian Legal System

Defining Nigerian legal terms and advising on audit obligations for a limited liability partnership under CAMA 2020.

a. Nigerian courts are enjoined to apply the common law of England, doctrines of equity, and statutes of general application that were in force on the 1st of January 1900.

Required:

  • Define:
    i. Common law (1 Mark)
    ii. Equity (1 Mark)
    iii. Statutes of general application (1 Mark)

b. Mercy and Samuel, who are the only partners of a limited liability partnership, are protesting a demand letter served on them for the payment of the sum of N500,000 each by the Corporate Affairs Commission for failure to audit the partnership’s account for the immediate past year and failure to file annual returns for the same period. They are protesting on the grounds that they are not a company and, therefore, not liable to file annual returns, and that the Corporate Affairs Commission has no right to demand the audit. They have approached you as a professional to advise them.

Required:
Advise the partners in line with the provisions of the Companies and Allied Matters Act 2020 on:

i. The Corporate Affairs Commission’s demand for the partnership’s audit (4 Marks)
ii. Whether or not the partnership was under a legal duty to file annual returns with the Corporate Affairs Commission (4 Marks)

c. A limited liability partnership must have a designated partner.

Required:
What shall a designated partner be responsible for? (4 Marks)

d. ADR is the abbreviation for Alternative Dispute Resolution.

Required:

i. Explain briefly Alternative Dispute Resolution (2 Marks)
ii. State THREE mechanisms of Alternative Dispute Resolution (3 Marks)

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  • 1 Marks

BL – Nov 2021 – L1 – SA – Q20 – Alternative Dispute Resolution

Identifying the minimum number of members in a conciliation body.

The minimum number of a conciliation body is
A. 5
B. 4
C. 3
D. 2
E. 1

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  • 1 Marks

BL – Nov 2021 – L1 – SA – Q19 – Law of Trusts

Defining a trust that comes into being from the presumed intention of a settlor.

A trust which comes into being from the presumed intention of a settlor is known as
A. Presumed trust
B. Private trust
C. Express trust
D. Implied trust
E. Constructive trust

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  • 1 Marks

BL – Nov 2021 – L1 – SA – Q18 – Employment Law

Identifying the relationship between an employer and an employee.

The relationship between two persons in which one person is subject to the command of the other on how he should do his work is known as
A. Slavery
B. Contract for service
C. Contract of service
D. General contract
E. Casual employee

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  • 1 Marks

BL – Nov 2021 – L1 – SA – Q17 – Agency Law

Defining when a banker/customer relationship comes into being.

A banker/customer relationship comes into being only when a person
A. Transacts any business with a bank
B. Has an account in his name in a bank
C. Presents a cheque to a bank for payment
D. Has a contractual relationship of whatever kind with a bank
E. Works for a bank

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  • 1 Marks

BL – Nov 2021 – L1 – SA – Q16 – Agency Law

Determining the document that initiates an insurance contract.

The document by which an insured initiates an insurance contract is known as
A. Proposal form
B. Application form
C. Insurance form
D. Policy form
E. Proposer form

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  • 1 Marks

BL – Nov 2021 – L1 – SA – Q15 – Hire Purchase and Consumer Credit Transactions

Identifying the liability of the owner for breaching a hire purchase warranty.

An owner that is in breach of a warranty under a hire purchase agreement is liable to
A. Pay damages to the hirer
B. Forfeit every right under the agreement
C. Lose his right to further installment payments
D. Refund all installments already paid by the hirer
E. Repudiate the agreement

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