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Question 1b

Your manager has had a telephone conversation with Burt, the Group Finance Director of the Epon Ltd group of companies. Extracts from both a memorandum and an email from your manager are set out below.

Extract from a memorandum from your manager


On Thursday 6 June I spoke to Burt, the Group Finance Director of Epon Ltd. He is coming to the office on Monday to appoint us as tax advisers to the group, and possibly to the individual directors, and to discuss the group’s affairs.

The Epon Ltd group
Epon Ltd is owned by a large number of unrelated individuals. Epon Ltd owns 100% of the ordinary share capital of Wahzah Ltd, Yoko Ltd and NewCo Ltd. All four companies are UK resident and prepare accounts to 30 June each year.

The purchase of equipment from the country of Candara
A new supplier of equipment for the fitness clubs has been identified in Candara. Wahzah Ltd intends to purchase equipment from this supplier in July 2013. The country of Candara is not a member of the European Union.


Extract from an email from your manager


Please prepare a memorandum for the client file that addresses the following issues:

(b) The purchase of equipment from the country of Candara
Explain the value added tax (VAT) implications for Wahzah Ltd of the purchase of the equipment from the country of Candara.

Tax manager


Required:
Prepare the memorandum requested in the email from your manager. The following marks are available.
(b) The purchase of equipment from the country of Candara. (2 marks)