THE CHARTERED INSTITUTE OF TAXATION
ADVANCED TECHNICAL
Domestic Indirect Taxation
May 2022
TIME ALLOWED
3 HOURS 30 MINUTES
• All workings should be shown and made to the nearest month and pound unless the question specifies
otherwise.
• Candidates who answer any law elements in this paper in accordance with Scots law or Northern
Ireland law should indicate this where relevant.
• Scots law candidates may provide answers referring to Land and Buildings Transaction Tax rather
than Stamp Duty Land Tax.
• Unless otherwise indicated by the provision of additional information in the question, you may assume
that 2021/22 legislation (including rates and allowances) continues to apply for 2022/23 and future
years. Candidates answering by reference to more recently enacted legislation or tax cases will not
be penalised.
• You must type your answer in the space on the screen as indicated by the Exam4 guidance.
,1. TZR Renovation Ltd is a VAT and CIS registered construction and development company which is
undertaking two projects.
New Build Project
It purchased a piece of land five years ago on which it planned to construct 100 new houses. VAT
was not charged on its purchase. Construction began in 2020, with 85 of the properties constructed
to date.
Electrical and plumbing sub-contractors are used by TZR Renovation Ltd to connect the houses to
mains water and power supplies. Scaffolding services are provided by two sub-contractors. One
charges separate fees for hiring, erecting and dismantling the scaffolding and the other makes a
single charge for all services. One scaffolding sub-contractor asked if TZR Renovation Ltd would
be making an end user notification. No notifications have been made to any of the sub-contractors,
as TZR Renovation Ltd does not understand the implications for the business.
Refurbishment Project
In January 2022, following receipt of planning permission, TZR Renovation Ltd commenced the
conversion of a four storey house into two self-contained flats, for its owner, Woulham Estates Ltd.
Until work commenced, the house had always been a single residence occupied by a tenant of
Woulham Estates Ltd. Each flat will have its own external front door with no restrictions on the
separate use or disposal of each flat.
TZR Renovation Ltd contracted with Woulham Interiors Ltd, a wholly-owned subsidiary of Woulham
Estates Ltd, to undertake the conversion to a basic plasterboard finish. TZR Renovation Ltd used
electrical and plumbing sub-contractors to connect the flats to mains water and power supplies and
a scaffolding sub-contractor. Woulham Interiors Ltd specialises in interior design and redecoration
and is registered for VAT and CIS. It will invoice TZR Renovation Ltd’s costs to Woulham Estates
Ltd, together with its own charges for plumbing and electrical work, re-decorating and tiling the
floors.
TZR Renovation Ltd received an email from Woulham Interiors Ltd, confirming that it will be
recharging the works supplied by TZR Renovation Ltd to its parent company. However, Woulham
Interiors Ltd has disputed the VAT charged on the first invoice from TZR Renovation Ltd and is
requesting a VAT only credit note.
TZR Renovation Ltd has used construction staff from two local contractors, 5P Construct Ltd and
Keypen Ltd, to service both projects. The staff from 5P Construct Ltd are skilled carpenters, a price
was agreed in advance for the work and 5P Construct Ltd takes full responsibility for correcting any
defects. Keypen Ltd provides three general labourers who work under the direction of TZR
Renovation Ltd’s foreman, based on an agreed hourly rate.
Requirement:
Discuss the VAT treatment of the supplies received by TZR Renovation Ltd and its onward
supplies of property and construction services. (15)
Page 2 of 7 AT DIT
,2. Skiwithus Ltd is a commercial provider of skiing activities and has been operating since December
2017, from its dry ski slope centre in the Midlands. The company offers skiing and snowboarding
lessons to children and adults. Lesson fees do not include equipment hire, but individuals can pay
an additional fee for hire, where required.
Experienced snowboarders and skiers can purchase passes to access the cable suspended ski lift
and can pay an additional fee for equipment hire. Anybody can access the slope free of charge,
although in most cases people using the slope purchase a lift pass.
The company offers private parties for children using large inflatable rings to slide down the ski
slope. The charge for parties is £20 per child, which includes a meal in the onsite café.
On Tuesday evenings, Skiwithus Ltd hires out the ski slope, equipment and facilities to a local
unconnected ski club in return for a fee. An employee of Skiwithus Ltd opens and closes the ski
slope on this evening and takes responsibility for handing out the correct equipment to skiers during
the session. The club has exclusive use of the facilities during its session and has pre-booked and
paid for this slot for three months in advance, as detailed in a written agreement.
Skiwithus Ltd also owns a hotel in Scotland and offers package skiing holidays in its own name.
The package includes accommodation at its hotel, lessons and passes that allow use of an eight
person cable-suspended ski lift on a nearby public slope. Travel to and from the Scottish hotel and
slope is not included as part of the package.
Skiwithus Ltd prepares returns to 31 March, 30 June, 30 September and 31 December each year,
and has been treating its supplies as follows:
Activity VAT Treatment
Ski/snowboard lessons Exempt
Hire of ski equipment Standard rate
Dry ski slope pass Zero rate
Snow tubing parties Standard rate
Hire of slope Standard rate
Ski holiday package Standard rate VAT on hotel accommodation only
HMRC visited Skiwithus Ltd in January 2020 and raised enquires on Skiwithus Ltd’s supplies. In
June 2020, Skiwithus Ltd received a letter confirming that HMRC’s enquiries were being placed on
hold temporarily as a result of internal resourcing issues caused by Covid-19. HMRC subsequently
requested some further information to assist with the enquiries on 17 July 2021. Skiwithus Ltd was
closed for a period of time due to Covid-19 and, as a result, provided this information in January
2022, based on the treatment set out above, and providing values from 1 October 2017 to
31 December 2021. This information has been used to calculate the value of HMRC’s assessment,
dated 15 April 2022, which covers the periods 12/17 to 12/21.
Requirement:
Explain, with reference to case law, the VAT liabilities of Skiwithus Ltd’s supplies and advise
on possible actions to be taken in respect of HMRC’s assessment. You are NOT required to
discuss penalties. (20)
Page 3 of 7 AT DIT
, 3. Newplace University has decided to offer travel insurance to its students. They will be able to buy
either single trip or annual travel insurance. The cover will also be made available to overseas
students before they arrive in the UK for the first time.
On 1 July 2022, Newplace University will incorporate a new wholly owned company, Newplace
Insurance Ltd, with the intention of commencing business later that month. It will arrange for the
insurance to be supplied to the students by a third-party insurer, Insright Ltd. Students will purchase
the insurance online through Newplace Insurance Ltd’s website and will generally pay by credit or
debit card for the full amount due under the policy.
Two options are being considered for providing the annual insurance policies:
1) The student will pay £125 to Newplace Insurance Ltd and £115 will be passed on to Insright
Ltd, with Newplace Insurance Ltd retaining £10 for arranging the insurance. The student will
receive an itemised bill detailing the transactions.
2) Newplace Insurance Ltd will not charge a fee to each student, but instead the premium
receivable under the contract of insurance is £125, which is collected from the student and
passed on in full to Insright Ltd. Each quarter Insright Ltd will add up the total number of
policies sold by Newplace Insurance Ltd and pay it £10 for each sale.
Where students do not wish to pay by debit or credit card, they can pay the total amount of £125 in
three equal monthly instalments, but interest will be charged by Insright Ltd. Newplace Insurance Ltd
would receive its fee out of the first instalment.
The insurance policy will also include, at no extra cost, cover for the reimbursement of medical
expenses incurred abroad, should the policyholder become ill.
For single trip insurance, Newplace Insurance Ltd is considering the same two options above. For
these sales, its fee will be 10% of the total sum charged to the student. The ability to pay by
instalments will not however be available for single trip policies.
Newplace Insurance Ltd wishes to understand the Insurance Premium Tax implications of the above
options.
Requirement:
Explain the Insurance Premium Tax implications of the above proposals and recommend
which option Newplace Insurance Ltd should take. (15)
Page 4 of 7 AT DIT
ADVANCED TECHNICAL
Domestic Indirect Taxation
May 2022
TIME ALLOWED
3 HOURS 30 MINUTES
• All workings should be shown and made to the nearest month and pound unless the question specifies
otherwise.
• Candidates who answer any law elements in this paper in accordance with Scots law or Northern
Ireland law should indicate this where relevant.
• Scots law candidates may provide answers referring to Land and Buildings Transaction Tax rather
than Stamp Duty Land Tax.
• Unless otherwise indicated by the provision of additional information in the question, you may assume
that 2021/22 legislation (including rates and allowances) continues to apply for 2022/23 and future
years. Candidates answering by reference to more recently enacted legislation or tax cases will not
be penalised.
• You must type your answer in the space on the screen as indicated by the Exam4 guidance.
,1. TZR Renovation Ltd is a VAT and CIS registered construction and development company which is
undertaking two projects.
New Build Project
It purchased a piece of land five years ago on which it planned to construct 100 new houses. VAT
was not charged on its purchase. Construction began in 2020, with 85 of the properties constructed
to date.
Electrical and plumbing sub-contractors are used by TZR Renovation Ltd to connect the houses to
mains water and power supplies. Scaffolding services are provided by two sub-contractors. One
charges separate fees for hiring, erecting and dismantling the scaffolding and the other makes a
single charge for all services. One scaffolding sub-contractor asked if TZR Renovation Ltd would
be making an end user notification. No notifications have been made to any of the sub-contractors,
as TZR Renovation Ltd does not understand the implications for the business.
Refurbishment Project
In January 2022, following receipt of planning permission, TZR Renovation Ltd commenced the
conversion of a four storey house into two self-contained flats, for its owner, Woulham Estates Ltd.
Until work commenced, the house had always been a single residence occupied by a tenant of
Woulham Estates Ltd. Each flat will have its own external front door with no restrictions on the
separate use or disposal of each flat.
TZR Renovation Ltd contracted with Woulham Interiors Ltd, a wholly-owned subsidiary of Woulham
Estates Ltd, to undertake the conversion to a basic plasterboard finish. TZR Renovation Ltd used
electrical and plumbing sub-contractors to connect the flats to mains water and power supplies and
a scaffolding sub-contractor. Woulham Interiors Ltd specialises in interior design and redecoration
and is registered for VAT and CIS. It will invoice TZR Renovation Ltd’s costs to Woulham Estates
Ltd, together with its own charges for plumbing and electrical work, re-decorating and tiling the
floors.
TZR Renovation Ltd received an email from Woulham Interiors Ltd, confirming that it will be
recharging the works supplied by TZR Renovation Ltd to its parent company. However, Woulham
Interiors Ltd has disputed the VAT charged on the first invoice from TZR Renovation Ltd and is
requesting a VAT only credit note.
TZR Renovation Ltd has used construction staff from two local contractors, 5P Construct Ltd and
Keypen Ltd, to service both projects. The staff from 5P Construct Ltd are skilled carpenters, a price
was agreed in advance for the work and 5P Construct Ltd takes full responsibility for correcting any
defects. Keypen Ltd provides three general labourers who work under the direction of TZR
Renovation Ltd’s foreman, based on an agreed hourly rate.
Requirement:
Discuss the VAT treatment of the supplies received by TZR Renovation Ltd and its onward
supplies of property and construction services. (15)
Page 2 of 7 AT DIT
,2. Skiwithus Ltd is a commercial provider of skiing activities and has been operating since December
2017, from its dry ski slope centre in the Midlands. The company offers skiing and snowboarding
lessons to children and adults. Lesson fees do not include equipment hire, but individuals can pay
an additional fee for hire, where required.
Experienced snowboarders and skiers can purchase passes to access the cable suspended ski lift
and can pay an additional fee for equipment hire. Anybody can access the slope free of charge,
although in most cases people using the slope purchase a lift pass.
The company offers private parties for children using large inflatable rings to slide down the ski
slope. The charge for parties is £20 per child, which includes a meal in the onsite café.
On Tuesday evenings, Skiwithus Ltd hires out the ski slope, equipment and facilities to a local
unconnected ski club in return for a fee. An employee of Skiwithus Ltd opens and closes the ski
slope on this evening and takes responsibility for handing out the correct equipment to skiers during
the session. The club has exclusive use of the facilities during its session and has pre-booked and
paid for this slot for three months in advance, as detailed in a written agreement.
Skiwithus Ltd also owns a hotel in Scotland and offers package skiing holidays in its own name.
The package includes accommodation at its hotel, lessons and passes that allow use of an eight
person cable-suspended ski lift on a nearby public slope. Travel to and from the Scottish hotel and
slope is not included as part of the package.
Skiwithus Ltd prepares returns to 31 March, 30 June, 30 September and 31 December each year,
and has been treating its supplies as follows:
Activity VAT Treatment
Ski/snowboard lessons Exempt
Hire of ski equipment Standard rate
Dry ski slope pass Zero rate
Snow tubing parties Standard rate
Hire of slope Standard rate
Ski holiday package Standard rate VAT on hotel accommodation only
HMRC visited Skiwithus Ltd in January 2020 and raised enquires on Skiwithus Ltd’s supplies. In
June 2020, Skiwithus Ltd received a letter confirming that HMRC’s enquiries were being placed on
hold temporarily as a result of internal resourcing issues caused by Covid-19. HMRC subsequently
requested some further information to assist with the enquiries on 17 July 2021. Skiwithus Ltd was
closed for a period of time due to Covid-19 and, as a result, provided this information in January
2022, based on the treatment set out above, and providing values from 1 October 2017 to
31 December 2021. This information has been used to calculate the value of HMRC’s assessment,
dated 15 April 2022, which covers the periods 12/17 to 12/21.
Requirement:
Explain, with reference to case law, the VAT liabilities of Skiwithus Ltd’s supplies and advise
on possible actions to be taken in respect of HMRC’s assessment. You are NOT required to
discuss penalties. (20)
Page 3 of 7 AT DIT
, 3. Newplace University has decided to offer travel insurance to its students. They will be able to buy
either single trip or annual travel insurance. The cover will also be made available to overseas
students before they arrive in the UK for the first time.
On 1 July 2022, Newplace University will incorporate a new wholly owned company, Newplace
Insurance Ltd, with the intention of commencing business later that month. It will arrange for the
insurance to be supplied to the students by a third-party insurer, Insright Ltd. Students will purchase
the insurance online through Newplace Insurance Ltd’s website and will generally pay by credit or
debit card for the full amount due under the policy.
Two options are being considered for providing the annual insurance policies:
1) The student will pay £125 to Newplace Insurance Ltd and £115 will be passed on to Insright
Ltd, with Newplace Insurance Ltd retaining £10 for arranging the insurance. The student will
receive an itemised bill detailing the transactions.
2) Newplace Insurance Ltd will not charge a fee to each student, but instead the premium
receivable under the contract of insurance is £125, which is collected from the student and
passed on in full to Insright Ltd. Each quarter Insright Ltd will add up the total number of
policies sold by Newplace Insurance Ltd and pay it £10 for each sale.
Where students do not wish to pay by debit or credit card, they can pay the total amount of £125 in
three equal monthly instalments, but interest will be charged by Insright Ltd. Newplace Insurance Ltd
would receive its fee out of the first instalment.
The insurance policy will also include, at no extra cost, cover for the reimbursement of medical
expenses incurred abroad, should the policyholder become ill.
For single trip insurance, Newplace Insurance Ltd is considering the same two options above. For
these sales, its fee will be 10% of the total sum charged to the student. The ability to pay by
instalments will not however be available for single trip policies.
Newplace Insurance Ltd wishes to understand the Insurance Premium Tax implications of the above
options.
Requirement:
Explain the Insurance Premium Tax implications of the above proposals and recommend
which option Newplace Insurance Ltd should take. (15)
Page 4 of 7 AT DIT
