Liza requires detailed advice on rollover relief, capital allowances and group registration for the purposes of value added tax (VAT).

Liza’s business interests:
– Liza’s business interests, which have not changed for many years, are set out below.

– All six companies are UK resident trading companies with a 31 March year end.
– All of the minority holdings are owned by individuals, none of whom is connected with Liza or with each other.

A building (‘Building I’) sold by Bar Ltd:
– Bar Ltd sold Building I on 31 May 2013 for £860,000.
– Bar Ltd had purchased the building on 1 June 2007 for £315,000 plus legal fees of £9,000.
– On 5 June 2007, Bar Ltd had carried out work on the building’s roof at a cost of £38,000 in order to make the building fit for use.
– On 1 July 2012, Bar Ltd spent £14,000 repainting the building.
– Bar Ltd used Building I for trading purposes apart from the period from 1 January 2009 to 30 June 2010.
– It is intended that the chargeable gain on the sale will be rolled over to the extent that this is possible.

A replacement building (‘Building II’) purchased by Bar Ltd:
– Bar Ltd purchased Building II, new and unused, for £720,000 on 1 May 2013.
– Bar Ltd uses two thirds of this building for trading purposes; the remaining one-third is rented out.

The trading activities of the Bar Ltd and Hoop Ltd groups of companies:
– The number of transactions between the Bar Ltd group and the Hoop Ltd group is increasing.
– Vault Ltd makes zero rated supplies; all of the other five companies make standard rated supplies.

Required:
(c) Explain which of the companies in the Bar Ltd and Hoop Ltd groups would be able to register as a single group for the purposes of value added tax (VAT) and discuss the potential advantages and disadvantages of registering them as a single VAT group. (7 marks)