You have received an email from your manager with an attached schedule in connection with the Forti Ltd group of
companies. The schedule and the email are set out below.

Email from your manager

The Forti Ltd group

Forti Ltd has an issued share capital of 120,000 ordinary shares. It is owned by 12 shareholders, each of whom owns 10,000 ordinary shares.

All six of the companies are trading companies. Gordini Co is resident in and trades in the country of Arrowsia; it does not carry out any activities in the UK. The other five companies are all resident in the UK. There is no double tax treaty between Arrowsia and the UK.

The work I require you to do is set out below.

(c) Value added tax (VAT) annual accounting scheme
The management of the Forti Ltd group have asked for advice on the VAT annual accounting scheme.
State the conditions which must be satisfied by any company wishing to operate the annual accounting scheme and explain the operation of the scheme.

Tax manager

Required:
Carry out the work required as set out in the email from your manager. The following marks are available.

(c) Value added tax (VAT) annual accounting scheme. (5 marks)

Note: Ignore value added tax (VAT). (12 marks)