Question 2b

Your manager has sent you a schedule prepared by Claire Falkner concerning her company, Plad Ltd, and a new company, Quil Ltd, which she intends to incorporate on 1 July 2019. The covering email from your manager details the work he requires you to do.

Attachment: Schedule from Claire Falkner – dated 3 June 2019


Quil Ltd
Quil Ltd will be incorporated, registered for value added tax (VAT) and commence trading on 1 July 2019. It will trade in the UK and be a UK resident company.

From a commercial standpoint, my intention was to own Quil Ltd personally. However, if there is a sufficient tax advantage, I will consider establishing the company as a wholly-owned subsidiary of Plad Ltd.

Value added tax (VAT)
I would like the two companies to register as a group for VAT purposes (to avoid the need to charge VAT on intra group supplies and to generally reduce administration) and for the group to continue to use the annual accounting scheme currently used by Plad Ltd. I appreciate this would mean that the two companies would be jointly and severally liable for the group’s VAT liability.

Extract from the email from your manager – dated 4 June 2019


Please carry out the following work:

(b) Group registration for value added tax (VAT) purposes

Explain any additional matters of which Claire should be aware in relation to group registration for VAT purposes.

Tax manager

Required:
Prepare the notes as requested in the email from your manager. The following marks are available:

(b) Group registration for value added tax (VAT) purposes. (3 marks)

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