THE CHARTERED INSTITUTE OF TAXATION
ADVANCED TECHNICAL
Cross-Border Indirect Taxation
November 2021
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.
• Except as set out below or indicated by additional information in the question, you may assume that
2020/21 legislation (including rates and allowances) continues to apply for 2021/22 and future years.
1) You MUST assume that the UK remains within the European Union.
2) You MUST ignore all temporary Covid related legislation including furlough, grants, loans and the
reductions in VAT and SDLT rates.
Except in relation to points 1) and 2) above, 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. Mazzel Inc is a US based manufacturer of plastic components used in various household
appliances. It has been supplying European based appliance manufacturers through its distribution
centre based in the Netherlands. Mazzel Inc frequently engages the services of third parties and it
has no employees or directors outside of the US.
Mazzel Inc imports all components to its distribution centre in the Netherlands from its Chinese
subsidiary Mazzel Manufacturing LLC in its own name. It recovers the import VAT due on the
components through its Dutch VAT registration. Since 15 March 2020, Mazzel Inc has been
supplying three UK VAT registered customers (HW Irons Ltd, HW Kettles Ltd and X-Brooms Ltd),
with each purchasing different components.
Mazzel Inc has been utilising the call-off stock simplification and delivering the required components
to a UK warehouse in batches. A barcode scanner is used each time the components are taken
by each customer, with the data feeding to Mazzel Inc’s ERP system in real time. The warehouse
is owned by Mazzel Inc and it is operated by a third-party specialist warehouse management
company.
Below are Mazzel Inc’s records of the UK stock:
Delivered Delivered Called-off Called-off
Units Value Units Value
£ £
Part A intended for HW Irons Ltd
Arrived 15 March 2020 25,000 375,000
Arrived 5 September 2020 55,700 835,500
Arrived 15 February 2021 24,850 372,750
Stock deteriorated in warehouse flooding
on 30 January 2021, discovered on
2 February 2021 (5,400) (81,000)
Part A Total 100,150 1,502,250 92,600 1,389,000
Part B intended for HW Kettles Ltd
Arrived 28 March 2020 5,300 333,900
Arrived 10 October 2020 8,200 516,600
Arrived 28 May 2021 6,000 378,000
Part B Total 19,500 1,228,500 13,400 844,200
Part C intended for X-Brooms Ltd
Arrived 10 May 2020 1,200 58,800
Arrived 12 February 2021 4,000 196,000
Arrived 5 April 2021 1,800 88,200
Part C Total 7,000 343,000 6,500 318,500
HW Irons Ltd and HW Kettles Ltd belong to House Whizz plc corporate group, which is ceasing to
trade, and the parts ordered from Mazzel Inc will not be required, although the contracts have not
yet been terminated. Mazzel Inc has been able to find buyers for the components delivered for HW
Irons Ltd (Part A) and HW Kettles Ltd (Part B) but not yet called-off by them. Part A stock will be
exported to the US and delivered to Mazzel Inc’s warehouse and Part B stock will be sold to
Madellie BV, an intermediary in the Netherlands, for an onward supply to its customer based in
Germany.
Requirement:
Explain the VAT consequences for Mazzel Inc of the UK stock transactions.
You are NOT required to comment on EC Sales List or Intrastat implications. (20)
Page 2 of 6 AT CBIT
,2. BWAY Ltd is incorporated in the British Virgin Islands and it owns a fleet of boats, which are
operated commercially in the Caribbean region through a chain of agents. It is not registered for
UK VAT. BWAY Ltd’s regional sales director, who resides in the UK, has identified an opportunity
to expand its operations to the UK, based at the port of Liverpool. The business plan assumes the
provision of four boats as set out below:
Vessel Tonnage Passenger
Capacity
BWAY1 16.5 62
BWAY2 15.5 57
BWAY3 14.5 40
BWAY4 16 8
Apart from BWAY4 the boats are not designed or adapted for recreation or pleasure. Also, except
for BWAY4, all boats will be provided with a helmsman and crew; for BWAY4 it will depend on
customer requirements whether a helmsman and crew are provided. All vessels will be from the
existing fleet and they will be moved to Liverpool to provide the services. BWAY Ltd will not employ
any staff in the UK and the helmsmen and crew members will be self-employed, directly contracting
with BWAY Ltd. They provide similar services to other companies unconnected to BWAY Ltd.
BWAY Ltd will keep the vessels in Liverpool, which will also be used as an overhaul base for the
fleet. The maintenance and overhaul services will be provided by ABA Boats Ltd, based at the port.
The use of the vessels will be restricted to day trips between Liverpool and international waters,
with no stop-overs at other locations.
As BWAY Ltd has no place of business in the UK and its name is not well known, it has identified
a UK based agency BO&FUN plc, which will advertise and sign up clients for events and private
hire. It is expected they will be individuals and business clients. Negotiations with BO&FUN plc are
still progressing and it is yet to be determined whether BWAY Ltd will operate in its own name or
under the BO&FUN brand.
Requirement:
Explain the VAT implications for BWAY Ltd relating to the planned new operations in the
UK. (15)
Page 3 of 6 AT CBIT
, 3. Uniedu Foundation is a Spanish VAT registered and established charity, which provides astronomy
and science training to schools and adults. It uses any surplus solely for the continuation or
improvement of the educational supplies it makes. To date Uniedu Foundation has only been
providing its services to schools and adults in Spanish speaking countries. The organisation does
not receive government grants and it has funded its activities from private and corporate donations,
supplemented with its own fundraising activities.
Uniedu Foundation has applied to the UK Charity Commissioners for its charitable status to be
recognised in the UK because it wishes to expand its activities here. It will do this through offering
a limited number of classroom training and web-based seminars to secondary schools, along with
advanced knowledge courses and on-line activities for those who want to further develop their
knowledge.
The classroom teaching will be free-of-charge and it will take place on school premises or through
a web conference facility hosted at the schools, for use when face-to-face lessons are not possible.
Uniedu Foundation will also provide more advanced astronomy and science knowledge courses,
each made up of several evening lectures, which will be delivered at university halls or hotels. A
single fee will be charged for these lectures.
In addition to the teaching activities, Uniedu Foundation wants to introduce a new online service. It
will develop an English language website which will be used to provide interactive science focused
online activities to individuals for a fee. This website will be developed by a UK based company
and it will be hosted in the UK.
All teaching (school classes, online and lectures) will be provided by suitably qualified and
experienced freelance lecturers based in the UK, who will contract with Uniedu Foundation for
these services. Uniedu Foundation will produce special laminated leaflets, designed as a reference
material to be used by the lecture attendees. The leaflets will be printed in Germany and delivered
to the UK by the printer.
The projected costs and forecast income are shown below.
Lectures School classes Total
Costs £ £ £
Leaflets 10,500 - 10,500
Tutors 32,000 28,000 60,000
Lecturing halls 15,600 - 15,600
Web development - - 240,000
Annual hosting fee - - 15,000
Projected Income
Income from online access 9,500
Income from lectures 75,000
Requirement:
Explain the VAT implications for Uniedu Foundation of its expansion into the UK including
any obligations it is required to comply with. (15)
Page 4 of 6 AT CBIT
ADVANCED TECHNICAL
Cross-Border Indirect Taxation
November 2021
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.
• Except as set out below or indicated by additional information in the question, you may assume that
2020/21 legislation (including rates and allowances) continues to apply for 2021/22 and future years.
1) You MUST assume that the UK remains within the European Union.
2) You MUST ignore all temporary Covid related legislation including furlough, grants, loans and the
reductions in VAT and SDLT rates.
Except in relation to points 1) and 2) above, 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. Mazzel Inc is a US based manufacturer of plastic components used in various household
appliances. It has been supplying European based appliance manufacturers through its distribution
centre based in the Netherlands. Mazzel Inc frequently engages the services of third parties and it
has no employees or directors outside of the US.
Mazzel Inc imports all components to its distribution centre in the Netherlands from its Chinese
subsidiary Mazzel Manufacturing LLC in its own name. It recovers the import VAT due on the
components through its Dutch VAT registration. Since 15 March 2020, Mazzel Inc has been
supplying three UK VAT registered customers (HW Irons Ltd, HW Kettles Ltd and X-Brooms Ltd),
with each purchasing different components.
Mazzel Inc has been utilising the call-off stock simplification and delivering the required components
to a UK warehouse in batches. A barcode scanner is used each time the components are taken
by each customer, with the data feeding to Mazzel Inc’s ERP system in real time. The warehouse
is owned by Mazzel Inc and it is operated by a third-party specialist warehouse management
company.
Below are Mazzel Inc’s records of the UK stock:
Delivered Delivered Called-off Called-off
Units Value Units Value
£ £
Part A intended for HW Irons Ltd
Arrived 15 March 2020 25,000 375,000
Arrived 5 September 2020 55,700 835,500
Arrived 15 February 2021 24,850 372,750
Stock deteriorated in warehouse flooding
on 30 January 2021, discovered on
2 February 2021 (5,400) (81,000)
Part A Total 100,150 1,502,250 92,600 1,389,000
Part B intended for HW Kettles Ltd
Arrived 28 March 2020 5,300 333,900
Arrived 10 October 2020 8,200 516,600
Arrived 28 May 2021 6,000 378,000
Part B Total 19,500 1,228,500 13,400 844,200
Part C intended for X-Brooms Ltd
Arrived 10 May 2020 1,200 58,800
Arrived 12 February 2021 4,000 196,000
Arrived 5 April 2021 1,800 88,200
Part C Total 7,000 343,000 6,500 318,500
HW Irons Ltd and HW Kettles Ltd belong to House Whizz plc corporate group, which is ceasing to
trade, and the parts ordered from Mazzel Inc will not be required, although the contracts have not
yet been terminated. Mazzel Inc has been able to find buyers for the components delivered for HW
Irons Ltd (Part A) and HW Kettles Ltd (Part B) but not yet called-off by them. Part A stock will be
exported to the US and delivered to Mazzel Inc’s warehouse and Part B stock will be sold to
Madellie BV, an intermediary in the Netherlands, for an onward supply to its customer based in
Germany.
Requirement:
Explain the VAT consequences for Mazzel Inc of the UK stock transactions.
You are NOT required to comment on EC Sales List or Intrastat implications. (20)
Page 2 of 6 AT CBIT
,2. BWAY Ltd is incorporated in the British Virgin Islands and it owns a fleet of boats, which are
operated commercially in the Caribbean region through a chain of agents. It is not registered for
UK VAT. BWAY Ltd’s regional sales director, who resides in the UK, has identified an opportunity
to expand its operations to the UK, based at the port of Liverpool. The business plan assumes the
provision of four boats as set out below:
Vessel Tonnage Passenger
Capacity
BWAY1 16.5 62
BWAY2 15.5 57
BWAY3 14.5 40
BWAY4 16 8
Apart from BWAY4 the boats are not designed or adapted for recreation or pleasure. Also, except
for BWAY4, all boats will be provided with a helmsman and crew; for BWAY4 it will depend on
customer requirements whether a helmsman and crew are provided. All vessels will be from the
existing fleet and they will be moved to Liverpool to provide the services. BWAY Ltd will not employ
any staff in the UK and the helmsmen and crew members will be self-employed, directly contracting
with BWAY Ltd. They provide similar services to other companies unconnected to BWAY Ltd.
BWAY Ltd will keep the vessels in Liverpool, which will also be used as an overhaul base for the
fleet. The maintenance and overhaul services will be provided by ABA Boats Ltd, based at the port.
The use of the vessels will be restricted to day trips between Liverpool and international waters,
with no stop-overs at other locations.
As BWAY Ltd has no place of business in the UK and its name is not well known, it has identified
a UK based agency BO&FUN plc, which will advertise and sign up clients for events and private
hire. It is expected they will be individuals and business clients. Negotiations with BO&FUN plc are
still progressing and it is yet to be determined whether BWAY Ltd will operate in its own name or
under the BO&FUN brand.
Requirement:
Explain the VAT implications for BWAY Ltd relating to the planned new operations in the
UK. (15)
Page 3 of 6 AT CBIT
, 3. Uniedu Foundation is a Spanish VAT registered and established charity, which provides astronomy
and science training to schools and adults. It uses any surplus solely for the continuation or
improvement of the educational supplies it makes. To date Uniedu Foundation has only been
providing its services to schools and adults in Spanish speaking countries. The organisation does
not receive government grants and it has funded its activities from private and corporate donations,
supplemented with its own fundraising activities.
Uniedu Foundation has applied to the UK Charity Commissioners for its charitable status to be
recognised in the UK because it wishes to expand its activities here. It will do this through offering
a limited number of classroom training and web-based seminars to secondary schools, along with
advanced knowledge courses and on-line activities for those who want to further develop their
knowledge.
The classroom teaching will be free-of-charge and it will take place on school premises or through
a web conference facility hosted at the schools, for use when face-to-face lessons are not possible.
Uniedu Foundation will also provide more advanced astronomy and science knowledge courses,
each made up of several evening lectures, which will be delivered at university halls or hotels. A
single fee will be charged for these lectures.
In addition to the teaching activities, Uniedu Foundation wants to introduce a new online service. It
will develop an English language website which will be used to provide interactive science focused
online activities to individuals for a fee. This website will be developed by a UK based company
and it will be hosted in the UK.
All teaching (school classes, online and lectures) will be provided by suitably qualified and
experienced freelance lecturers based in the UK, who will contract with Uniedu Foundation for
these services. Uniedu Foundation will produce special laminated leaflets, designed as a reference
material to be used by the lecture attendees. The leaflets will be printed in Germany and delivered
to the UK by the printer.
The projected costs and forecast income are shown below.
Lectures School classes Total
Costs £ £ £
Leaflets 10,500 - 10,500
Tutors 32,000 28,000 60,000
Lecturing halls 15,600 - 15,600
Web development - - 240,000
Annual hosting fee - - 15,000
Projected Income
Income from online access 9,500
Income from lectures 75,000
Requirement:
Explain the VAT implications for Uniedu Foundation of its expansion into the UK including
any obligations it is required to comply with. (15)
Page 4 of 6 AT CBIT
