THE CHARTERED INSTITUTE OF TAXATION
ADVANCED TECHNICAL
Cross-Border Indirect Taxation
November 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.
• Additional marks may be awarded for presentation.
• You must type your answer in the space on the screen as indicated by the Exam4 guidance.
,1. Organic Ices Ltd is a VAT registered company based in Enniskillen in Northern Ireland. It sells
luxury ice cream throughout the UK. A small amount of its product is sold to private individuals in
Northern Ireland via the company’s website. However, the bulk of its sales are to retailers, both in
Northern Ireland and in Great Britain.
The company is now looking to expand into the EU. It intends to start selling to private individuals
in the Republic of Ireland. In the year beginning 1 November 2022, it expects sales of €5,000, rising
to €30,000 in year two.
It has also begun discussions with two EU business customers. The first customer is Le Shopping
SA, which operates a small chain of supermarkets in France. The second customer is a wholesaler,
Eisundsachen GmbH, based in Germany and which supplies VAT-registered retailers throughout
the EU. Both companies are currently only registered for VAT in their home country.
Le Shopping SA does not want to buy stock it is not sure it can sell. Accordingly, it wants Organic
Ices Ltd to hold stock in France for delivery to its stores. To do this, Organic Ices Ltd will need to
rent warehouse space in France and arrange transport of the stock to Le Shopping SA’s stores
when it is requested to do so. It will use third parties to supply these services as it does not want to
take on employees outside Northern Ireland. Organic Ices Ltd believes that there may be scope for
servicing other business customers in France from this stock. If it is commercially viable, then the
company may supply private individuals from this warehouse too.
Eisundsachen GmbH is however happy to buy stock upfront. It wants Organic Ices Ltd to arrange
delivery of most of its purchases to its main warehouse in Munich. However, for some of its bigger
customers, based in Belgium, France and Spain, it has requested that Organic Ices Ltd arranges
delivery from Northern Ireland direct to the customer’s premises (as was the practice with its
previous supplier). The invoice will still be issued by Organic Ices Ltd to Eisundsachen GmbH,
which will then invoice its customer for the goods. Eisundsachen GmbH has said it is happy for its
French customer to be supplied from Organic Ices Ltd’s French warehouse if that is convenient.
Organic Ices Ltd is keen to reduce its carbon footprint and has had preliminary discussions with
both customers about potentially using new (but expensive) low-carbon freezers to hold stock
pending sale. For now, Le Shopping SA is not interested in this arrangement, and has said that in
any case it would not be willing to pay for the use of the freezers in its supermarkets even if sales
grew well. Eisundsachen GmbH however is keen to have the freezers shipped directly from
Northern Ireland to its Munich premises immediately and is willing to pay a small rental charge for
each freezer to help Organic Ices Ltd fund the purchase of the freezers. If sales go well, it will also
discuss increasing the number of freezers on its premises.
Requirement:
Explain Organic Ices Ltd’s VAT obligations in respect of the proposed transactions,
including any simplifications available. (20)
Page 2 of 6 AT CBIT
,2. ZXYdata Inc is a US-based company which arranges the construction of data centres all over the
world. It has recently been asked by a German accounting software provider, Buchkeeper AG, to
arrange the construction of new data centres in the UK and the Netherlands, beginning on
1 November 2022. It is expected the works will take about six to nine months to complete.
Buchkeeper AG has taken a long-term lease over a greenfield site near Manchester. It employs a
small local administration and sales team in the UK and one of the company’s directors has recently
moved from Germany to grow business opportunities there. Buchkeeper AG is VAT-registered in
the UK.
ZXYdata Inc will employ a single project manager based in Amsterdam to oversee both projects.
All of the design and construction works will be subcontracted to a mixture of UK and EU suppliers.
ZXYdata Inc has already identified its preferred suppliers for the projects. Some of the UK-based
professionals, such as architects and surveyors, will be working on both of the projects
simultaneously.
For the UK site, ZXYdata Inc must source both the specialist equipment such as data-processors,
and the building materials.
The equipment will all be coming from the USA. It has been agreed that ZXYdata Inc will be the
importer of record for these goods, but it has not been decided whether it will take title to the goods
itself, or simply act as Buchkeeper AG’s agent.
All of the building materials for the UK project will be supplied from within the UK. ZXYdata Inc will
purchase and sell on these materials to Buchkeeper AG as part of the construction service.
Buchkeeper AG has paid £1 million upfront to cover the first part of both projects. ZXYdata Inc’s
margin is incorporated in the overall figure.
Preliminary surveys have already been carried out for both sites by Kate Wong, an independent
contractor, who is based in Bristol and is registered for UK VAT. She has issued separate invoices
in respect of each site. However, she has charged UK VAT on both invoices. She has told ZXYdata
Inc that she is not registered for VAT in the Netherlands.
Kate Wong must carry out some additional work to allow physical construction to begin and is
insisting on being paid for the work she has already done first. Although it does not want to pay her
until it is sure of the correct position, ZXYdata Inc is keen to avoid any unnecessary delays to the
works.
Note that ZXYdata Inc has retained Dutch VAT advisers for the Netherlands element of the project
and does not require advice in respect of that element.
Requirement:
Explain ZXYdata Inc’s VAT position under the contract with Buchkeeper AG. (15)
Page 3 of 6 AT CBIT
, 3. Bruxelles Teddies VOF is a partnership based in Belgium which manufactures high-end teddy
bears and sells them to business customers all over the world, including in the UK. Its principal UK
customer is Luculia Ltd, a wholesaler based in Birmingham, which acts as importer into the UK.
The partnership has no staff or premises anywhere outside Belgium and relies on the distribution
networks of its business customers. The partners have however felt for a long time that the private
individual market overseas offered real opportunities. Accordingly, they have signed up with a major
multinational online marketing platform, Diosma plc.
This arrangement will allow Bruxelles Teddies VOF to begin making sales to private individuals in
the UK from 1 January 2023. Diosma plc will charge a flat fee of £10 per month plus a 10%
commission, deducted from the sales price, on all sales on the platform.
Diosma plc also offers the chance to make business sales from its platform, and the partnership is
keen to use this feature to expand its reach to smaller, niche retailers in the UK. It will continue to
supply Luculia Ltd as before.
Bruxelles Teddies VOF expects that most of its sales via Diosma plc will be sent in consignments
below £135 in value. However, its most expensive teddy bear retails for £180 (£150 plus VAT). The
partnership does not expect to sell very many of these, but as the profit margin is much greater for
the larger bears, it does want to offer them for sale in the UK.
In September 2020 Luculia Ltd advised Bruxelles Teddies VOF that from 1 January 2021, it would
no longer supply Northern Ireland. As the market was relatively small at that time, the partnership
decided not to seek an alternative distributor. However, the partnership has now been approached
directly by a chain of toy shops based and VAT-registered in Northern Ireland, which has expressed
interest in stocking Bruxelles Teddies VOF’s products in its shops.
As a result, the partnership is now seeking to establish whether it makes more sense to move
goods directly by ship from Belgium to Northern Ireland, or to send them via England and Wales,
since the transport costs by that route are lower.
Requirement:
Explain the UK VAT and Customs Duty implications of the proposed transactions. (15)
Page 4 of 6 AT CBIT
ADVANCED TECHNICAL
Cross-Border Indirect Taxation
November 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.
• Additional marks may be awarded for presentation.
• You must type your answer in the space on the screen as indicated by the Exam4 guidance.
,1. Organic Ices Ltd is a VAT registered company based in Enniskillen in Northern Ireland. It sells
luxury ice cream throughout the UK. A small amount of its product is sold to private individuals in
Northern Ireland via the company’s website. However, the bulk of its sales are to retailers, both in
Northern Ireland and in Great Britain.
The company is now looking to expand into the EU. It intends to start selling to private individuals
in the Republic of Ireland. In the year beginning 1 November 2022, it expects sales of €5,000, rising
to €30,000 in year two.
It has also begun discussions with two EU business customers. The first customer is Le Shopping
SA, which operates a small chain of supermarkets in France. The second customer is a wholesaler,
Eisundsachen GmbH, based in Germany and which supplies VAT-registered retailers throughout
the EU. Both companies are currently only registered for VAT in their home country.
Le Shopping SA does not want to buy stock it is not sure it can sell. Accordingly, it wants Organic
Ices Ltd to hold stock in France for delivery to its stores. To do this, Organic Ices Ltd will need to
rent warehouse space in France and arrange transport of the stock to Le Shopping SA’s stores
when it is requested to do so. It will use third parties to supply these services as it does not want to
take on employees outside Northern Ireland. Organic Ices Ltd believes that there may be scope for
servicing other business customers in France from this stock. If it is commercially viable, then the
company may supply private individuals from this warehouse too.
Eisundsachen GmbH is however happy to buy stock upfront. It wants Organic Ices Ltd to arrange
delivery of most of its purchases to its main warehouse in Munich. However, for some of its bigger
customers, based in Belgium, France and Spain, it has requested that Organic Ices Ltd arranges
delivery from Northern Ireland direct to the customer’s premises (as was the practice with its
previous supplier). The invoice will still be issued by Organic Ices Ltd to Eisundsachen GmbH,
which will then invoice its customer for the goods. Eisundsachen GmbH has said it is happy for its
French customer to be supplied from Organic Ices Ltd’s French warehouse if that is convenient.
Organic Ices Ltd is keen to reduce its carbon footprint and has had preliminary discussions with
both customers about potentially using new (but expensive) low-carbon freezers to hold stock
pending sale. For now, Le Shopping SA is not interested in this arrangement, and has said that in
any case it would not be willing to pay for the use of the freezers in its supermarkets even if sales
grew well. Eisundsachen GmbH however is keen to have the freezers shipped directly from
Northern Ireland to its Munich premises immediately and is willing to pay a small rental charge for
each freezer to help Organic Ices Ltd fund the purchase of the freezers. If sales go well, it will also
discuss increasing the number of freezers on its premises.
Requirement:
Explain Organic Ices Ltd’s VAT obligations in respect of the proposed transactions,
including any simplifications available. (20)
Page 2 of 6 AT CBIT
,2. ZXYdata Inc is a US-based company which arranges the construction of data centres all over the
world. It has recently been asked by a German accounting software provider, Buchkeeper AG, to
arrange the construction of new data centres in the UK and the Netherlands, beginning on
1 November 2022. It is expected the works will take about six to nine months to complete.
Buchkeeper AG has taken a long-term lease over a greenfield site near Manchester. It employs a
small local administration and sales team in the UK and one of the company’s directors has recently
moved from Germany to grow business opportunities there. Buchkeeper AG is VAT-registered in
the UK.
ZXYdata Inc will employ a single project manager based in Amsterdam to oversee both projects.
All of the design and construction works will be subcontracted to a mixture of UK and EU suppliers.
ZXYdata Inc has already identified its preferred suppliers for the projects. Some of the UK-based
professionals, such as architects and surveyors, will be working on both of the projects
simultaneously.
For the UK site, ZXYdata Inc must source both the specialist equipment such as data-processors,
and the building materials.
The equipment will all be coming from the USA. It has been agreed that ZXYdata Inc will be the
importer of record for these goods, but it has not been decided whether it will take title to the goods
itself, or simply act as Buchkeeper AG’s agent.
All of the building materials for the UK project will be supplied from within the UK. ZXYdata Inc will
purchase and sell on these materials to Buchkeeper AG as part of the construction service.
Buchkeeper AG has paid £1 million upfront to cover the first part of both projects. ZXYdata Inc’s
margin is incorporated in the overall figure.
Preliminary surveys have already been carried out for both sites by Kate Wong, an independent
contractor, who is based in Bristol and is registered for UK VAT. She has issued separate invoices
in respect of each site. However, she has charged UK VAT on both invoices. She has told ZXYdata
Inc that she is not registered for VAT in the Netherlands.
Kate Wong must carry out some additional work to allow physical construction to begin and is
insisting on being paid for the work she has already done first. Although it does not want to pay her
until it is sure of the correct position, ZXYdata Inc is keen to avoid any unnecessary delays to the
works.
Note that ZXYdata Inc has retained Dutch VAT advisers for the Netherlands element of the project
and does not require advice in respect of that element.
Requirement:
Explain ZXYdata Inc’s VAT position under the contract with Buchkeeper AG. (15)
Page 3 of 6 AT CBIT
, 3. Bruxelles Teddies VOF is a partnership based in Belgium which manufactures high-end teddy
bears and sells them to business customers all over the world, including in the UK. Its principal UK
customer is Luculia Ltd, a wholesaler based in Birmingham, which acts as importer into the UK.
The partnership has no staff or premises anywhere outside Belgium and relies on the distribution
networks of its business customers. The partners have however felt for a long time that the private
individual market overseas offered real opportunities. Accordingly, they have signed up with a major
multinational online marketing platform, Diosma plc.
This arrangement will allow Bruxelles Teddies VOF to begin making sales to private individuals in
the UK from 1 January 2023. Diosma plc will charge a flat fee of £10 per month plus a 10%
commission, deducted from the sales price, on all sales on the platform.
Diosma plc also offers the chance to make business sales from its platform, and the partnership is
keen to use this feature to expand its reach to smaller, niche retailers in the UK. It will continue to
supply Luculia Ltd as before.
Bruxelles Teddies VOF expects that most of its sales via Diosma plc will be sent in consignments
below £135 in value. However, its most expensive teddy bear retails for £180 (£150 plus VAT). The
partnership does not expect to sell very many of these, but as the profit margin is much greater for
the larger bears, it does want to offer them for sale in the UK.
In September 2020 Luculia Ltd advised Bruxelles Teddies VOF that from 1 January 2021, it would
no longer supply Northern Ireland. As the market was relatively small at that time, the partnership
decided not to seek an alternative distributor. However, the partnership has now been approached
directly by a chain of toy shops based and VAT-registered in Northern Ireland, which has expressed
interest in stocking Bruxelles Teddies VOF’s products in its shops.
As a result, the partnership is now seeking to establish whether it makes more sense to move
goods directly by ship from Belgium to Northern Ireland, or to send them via England and Wales,
since the transport costs by that route are lower.
Requirement:
Explain the UK VAT and Customs Duty implications of the proposed transactions. (15)
Page 4 of 6 AT CBIT
