The Chartered Institute of Taxation
AWARENESS
May 2022
TIME ALLOWED – 3 HOURS 15 MINUTES
• All five Awareness Modules are contained in this document.
• You must only answer the modules you have already entered for, no other module answers will be marked. You cannot
change your mind on the day of the exam.
• Type your answers between the correct question dividers and against the correct question number. Questions are
numbered 1 – 60. Do NOT delete any of the question dividers.
• If you are answering Module A VAT including Stamp Taxes you may, where appropriate, answer by reference to Stamp
Duty Land Tax or Land and Buildings Transaction Tax.
• Each module consists of 12 questions and each question carries 5 marks. To pass the exam you need to obtain a
minimum of 21 marks (35%) out of the 60 available per module and achieve an overall pass mark of at least 50%.
• You should answer all the questions in each of the three modules.
• You should answer questions in brief bullet points and/or summary computations where appropriate.
• You should make all calculations to the nearest month and pound unless stated otherwise.
• 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.
, Module A: VAT including Stamp Taxes
If you have entered for Module A you must answer Questions 1 – 12 and type your answers between the question
dividers 1 – 12.
1. Mark provides landscaping services and sells garden equipment to private customers.
1) He completed some landscaping services on 19 January but did not receive payment until 8 February.
2) Garden equipment was ordered on 29 January, with a 20% deposit paid on that date. Mark delivered the goods
on 3 February and an invoice was sent to the customer on 10 February.
Explain the tax points for these supplies.
2. Sally is preparing VAT invoices for the following property sales she has just made and is unsure what VAT, if any, should
be charged:
1) A three-acre plot of land sold to an individual who will build her own house on the site.
2) Land and a commercial storage unit built by Sally in 2020 for sale by way of freehold (Scots Law – ownership).
3) Land and an unused warehouse, which Sally had owned a long lease on for many years.
Explain the VAT rating of each supply.
3. Karim runs a business which has grown rapidly. The Financial Controller has highlighted some cashflow concerns,
mainly due to customers taking longer to pay than usual and has suggested they offer a prompt payment discount to
encourage customers to pay sooner.
Explain the effect of the discount on the VAT charge and supporting paperwork which will be issued to the
customers.
4. On 1 April 2018, Guam Ltd purchased a factory for £480,000, including VAT of £80,000. Guam Ltd immediately made
an option to tax in relation to the factory.
The company makes both taxable and exempt supplies and the split over recent years has been summarised below:
Year ended 31 March Taxable use %
2019 78
2020 84
2021 80
2022 76
On 31 March 2022, Guam Ltd sold the factory for £770,000, exclusive of VAT.
Calculate the capital goods scheme adjustment for the year ended 31 March 2022.
5. Becky wishes to deregister for VAT since her recent turnover has significantly reduced and is unlikely to increase in the
next few years.
She has items in stock purchased for £5,600 but now valued at £4,900, and computer and production equipment
purchased for £22,000 with a current value of £14,000. All of these are standard rated goods and Becky reclaimed the
VAT paid on their purchase. The values stated are net of VAT.
In addition to these, she has a computer which was purchased from a non-registered trader for £2,000, which is currently
valued at £1,500.
Explain:
1) Why Becky is able to deregister despite continuing to trade, and when this would be effective.
2) The necessary VAT adjustments in relation to the items still held by the business.
Page 2 of 17
,6. Scott is a second-hand car dealer. He usually purchases cars from members of the public but occasionally he buys cars
from other businesses.
During the month of March 2022, he bought and sold the following vehicles:
1) A van was purchased from a local business for £4,400 plus VAT. Repairs were necessary, costing £600 inclusive
of VAT, before the van was sold for £6,120.
2) A car was purchased from a member of the public for £2,500 and later sold for £3,700, after Scott paid £360
(including VAT) for small repairs to the bodywork.
Calculate the VAT payable for the month of March 2022.
7. Mino Ltd owns 100% of the share capital of Nyne Ltd and 40% of Ponn Ltd. An application for group registration was
made to include all possible entities.
During the latest quarter, the following sales and purchases were recorded by the companies:
Mino Ltd Nyne Ltd Ponn Ltd
£ £ £
Sales – all standard rated, exclusive of VAT:
To third parties 440,000 360,000 320,000
To Nyne Ltd 45,000 n/a 20,000
To Ponn Ltd 28,000 22,000 n/a
To Mino Ltd n/a 60,000 25,000
Calculate the Output VAT entry for the group VAT return for the quarter and state ONE disadvantage of a
group registration.
8. Albert has traded for many years, using the flat rate scheme for VAT purposes. The industry rate applicable is 12.5%.
Albert has provided the following information (net of any applicable VAT charges) for the quarter ended 30 April 2022:
Sales £
Standard rated goods 18,500
Zero rated goods 7,300
Machinery 4,000
Purchases and expenses
Materials and consumables 11,200
Albert claimed the VAT paid on the machinery when it was originally purchased.
Calculate the VAT payable for the quarter.
9. Debra has been a VAT registered trader for the last five years.
Debra received notice of an assurance visit by HMRC to take place on 10 March 2022. During the visit, the officers
discovered an error made in the return submitted for the quarter ended 30 June 2019.
An assessment for the VAT owing as a result of the error was issued by HMRC on 2 April 2022.
Explain why the assurance visit might have been arranged and whether the assessment was raised within the
permitted period.
Page 3 of 17
, 10. Bambi began trading on 1 October 2021. She has kept very little paperwork for her sales and purchases to date but is
able to summarise her total income and expenses from her bank records as no cash transactions took place.
Bambi has found that she should have registered for VAT with effect from 1 March 2022, since her turnover to date
exceeded the annual registration threshold as at 31 January 2022.
Explain the effects for Bambi of failing to register on time for VAT.
11. Carol has recently been appointed as Company Secretary of Olio Ltd and is reviewing the company’s share records.
She has noted three transactions which she is concerned about since the documents do not appear to have been
stamped:
28 April 2007 500 new shares were issued to an existing shareholder by Olio Ltd
14 September 2011 One of the shareholders gifted half of his shares to his daughter
3 January 2019 Another shareholder transferred half of her shares to her ex-husband as part of their
divorce arrangements
Explain whether the documents should have been stamped in each case and the legal position if stamping was
not completed where required.
12. Karl sold his main residence on 30 November 2021 for £2.6 million.
After purchasing a smaller apartment to live in himself in December 2021, Karl spent the remaining £1,540,000 in March
2022 purchasing eight houses from a property developer.
Explain the Stamp Duty Land Tax payable by Karl on the eight houses.
Page 4 of 17
AWARENESS
May 2022
TIME ALLOWED – 3 HOURS 15 MINUTES
• All five Awareness Modules are contained in this document.
• You must only answer the modules you have already entered for, no other module answers will be marked. You cannot
change your mind on the day of the exam.
• Type your answers between the correct question dividers and against the correct question number. Questions are
numbered 1 – 60. Do NOT delete any of the question dividers.
• If you are answering Module A VAT including Stamp Taxes you may, where appropriate, answer by reference to Stamp
Duty Land Tax or Land and Buildings Transaction Tax.
• Each module consists of 12 questions and each question carries 5 marks. To pass the exam you need to obtain a
minimum of 21 marks (35%) out of the 60 available per module and achieve an overall pass mark of at least 50%.
• You should answer all the questions in each of the three modules.
• You should answer questions in brief bullet points and/or summary computations where appropriate.
• You should make all calculations to the nearest month and pound unless stated otherwise.
• 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.
, Module A: VAT including Stamp Taxes
If you have entered for Module A you must answer Questions 1 – 12 and type your answers between the question
dividers 1 – 12.
1. Mark provides landscaping services and sells garden equipment to private customers.
1) He completed some landscaping services on 19 January but did not receive payment until 8 February.
2) Garden equipment was ordered on 29 January, with a 20% deposit paid on that date. Mark delivered the goods
on 3 February and an invoice was sent to the customer on 10 February.
Explain the tax points for these supplies.
2. Sally is preparing VAT invoices for the following property sales she has just made and is unsure what VAT, if any, should
be charged:
1) A three-acre plot of land sold to an individual who will build her own house on the site.
2) Land and a commercial storage unit built by Sally in 2020 for sale by way of freehold (Scots Law – ownership).
3) Land and an unused warehouse, which Sally had owned a long lease on for many years.
Explain the VAT rating of each supply.
3. Karim runs a business which has grown rapidly. The Financial Controller has highlighted some cashflow concerns,
mainly due to customers taking longer to pay than usual and has suggested they offer a prompt payment discount to
encourage customers to pay sooner.
Explain the effect of the discount on the VAT charge and supporting paperwork which will be issued to the
customers.
4. On 1 April 2018, Guam Ltd purchased a factory for £480,000, including VAT of £80,000. Guam Ltd immediately made
an option to tax in relation to the factory.
The company makes both taxable and exempt supplies and the split over recent years has been summarised below:
Year ended 31 March Taxable use %
2019 78
2020 84
2021 80
2022 76
On 31 March 2022, Guam Ltd sold the factory for £770,000, exclusive of VAT.
Calculate the capital goods scheme adjustment for the year ended 31 March 2022.
5. Becky wishes to deregister for VAT since her recent turnover has significantly reduced and is unlikely to increase in the
next few years.
She has items in stock purchased for £5,600 but now valued at £4,900, and computer and production equipment
purchased for £22,000 with a current value of £14,000. All of these are standard rated goods and Becky reclaimed the
VAT paid on their purchase. The values stated are net of VAT.
In addition to these, she has a computer which was purchased from a non-registered trader for £2,000, which is currently
valued at £1,500.
Explain:
1) Why Becky is able to deregister despite continuing to trade, and when this would be effective.
2) The necessary VAT adjustments in relation to the items still held by the business.
Page 2 of 17
,6. Scott is a second-hand car dealer. He usually purchases cars from members of the public but occasionally he buys cars
from other businesses.
During the month of March 2022, he bought and sold the following vehicles:
1) A van was purchased from a local business for £4,400 plus VAT. Repairs were necessary, costing £600 inclusive
of VAT, before the van was sold for £6,120.
2) A car was purchased from a member of the public for £2,500 and later sold for £3,700, after Scott paid £360
(including VAT) for small repairs to the bodywork.
Calculate the VAT payable for the month of March 2022.
7. Mino Ltd owns 100% of the share capital of Nyne Ltd and 40% of Ponn Ltd. An application for group registration was
made to include all possible entities.
During the latest quarter, the following sales and purchases were recorded by the companies:
Mino Ltd Nyne Ltd Ponn Ltd
£ £ £
Sales – all standard rated, exclusive of VAT:
To third parties 440,000 360,000 320,000
To Nyne Ltd 45,000 n/a 20,000
To Ponn Ltd 28,000 22,000 n/a
To Mino Ltd n/a 60,000 25,000
Calculate the Output VAT entry for the group VAT return for the quarter and state ONE disadvantage of a
group registration.
8. Albert has traded for many years, using the flat rate scheme for VAT purposes. The industry rate applicable is 12.5%.
Albert has provided the following information (net of any applicable VAT charges) for the quarter ended 30 April 2022:
Sales £
Standard rated goods 18,500
Zero rated goods 7,300
Machinery 4,000
Purchases and expenses
Materials and consumables 11,200
Albert claimed the VAT paid on the machinery when it was originally purchased.
Calculate the VAT payable for the quarter.
9. Debra has been a VAT registered trader for the last five years.
Debra received notice of an assurance visit by HMRC to take place on 10 March 2022. During the visit, the officers
discovered an error made in the return submitted for the quarter ended 30 June 2019.
An assessment for the VAT owing as a result of the error was issued by HMRC on 2 April 2022.
Explain why the assurance visit might have been arranged and whether the assessment was raised within the
permitted period.
Page 3 of 17
, 10. Bambi began trading on 1 October 2021. She has kept very little paperwork for her sales and purchases to date but is
able to summarise her total income and expenses from her bank records as no cash transactions took place.
Bambi has found that she should have registered for VAT with effect from 1 March 2022, since her turnover to date
exceeded the annual registration threshold as at 31 January 2022.
Explain the effects for Bambi of failing to register on time for VAT.
11. Carol has recently been appointed as Company Secretary of Olio Ltd and is reviewing the company’s share records.
She has noted three transactions which she is concerned about since the documents do not appear to have been
stamped:
28 April 2007 500 new shares were issued to an existing shareholder by Olio Ltd
14 September 2011 One of the shareholders gifted half of his shares to his daughter
3 January 2019 Another shareholder transferred half of her shares to her ex-husband as part of their
divorce arrangements
Explain whether the documents should have been stamped in each case and the legal position if stamping was
not completed where required.
12. Karl sold his main residence on 30 November 2021 for £2.6 million.
After purchasing a smaller apartment to live in himself in December 2021, Karl spent the remaining £1,540,000 in March
2022 purchasing eight houses from a property developer.
Explain the Stamp Duty Land Tax payable by Karl on the eight houses.
Page 4 of 17
