The Chartered Institute of Taxation
AWARENESS
November 2021
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.
• 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.
, Module A: VAT including Stamp Taxes
If you have entered for Module A you must answers Questions 1 – 12 and type your answers
between the question dividers 1 – 12.
1. Haggon Ltd was incorporated on 18 September 2021. It started to make wholly taxable supplies
on 1 October 2021 and registered for VAT with effect from 1 November 2021. Prior to the company’s
incorporation, a future shareholder paid for accountancy advice relating to the company’s trade.
Explain the further information required in order to determine whether Haggon Ltd may
recover the input VAT suffered on the accountancy advice.
2. Georgina makes standard-rated supplies. For the quarter ended 31 October 2021, her VAT
exclusive sales were £62,000.
In addition, in September 2021, Georgina gave four of her key customers a gift. The cost of each
gift was £105. The input VAT on the items was recovered in the quarter ended 31 July 2021.
Georgina’s purchases for the quarter were £18,000. This is before taking into account £180 for the
purchase of fuel in respect of a car used partly for business purposes. The VAT fuel scale charge
for the car for the quarter is £246.
All purchases are inclusive of standard rate VAT.
Calculate the VAT payable to HMRC for the quarter ended 31 October 2021.
3. Peter is a VAT registered trader. He recently opened a holiday park offering short breaks in luxury
tents. On arrival at the park, the customer is presented with an invoice showing the cost of the
serviced accommodation and a fixed charge for electricity. Peter does not provide any ancillary
travel services.
Explain the VAT treatment of the supply made by Peter.
4. Murmodon Ltd provides human resources services.
On 24 October 2021, Murmodon Ltd completed a one-off assignment for Hector. The company
issued an invoice on 30 October 2021. Hector paid the invoice on 2 November 2021.
Helen pays Murmodon Ltd a monthly retainer for providing a helpline service to her employees. On
28 October 2021, the company issued an invoice for the month of October 2021. Helen paid the
invoice on 3 November 2021.
Explain the tax point of the services provided by Murmodon Ltd to Hector and Helen.
Page 2 of 19
,5. During the quarter ended 30 October 2021, Sactuc Ltd suffered the following amounts of input tax
in relation to motor vehicles:
1) £2,000 on the purchase of a van. Private use of the van was insignificant.
2) £14,000 on the purchase of a car for use by the company’s Sales Director. It was used 85%
for business purposes.
3) £160 on repairs to the car used by the Sales Director.
4) £280 on monthly payments made under a two-year lease of a car for use by the marketing
manager. It was used 40% for business purposes.
5) £40 on hiring of a car for one day to replace the marketing manager’s car when
it was in the garage. The car was used for business and personal journeys.
Calculate, with explanations, the amount of input VAT the company may recover in respect
of the above transactions.
6. Celandi Ltd, which makes wholly standard-rated supplies, joined the cash accounting scheme in
2014. Its business has expanded in recent years, and it is expected to continue to grow in the
future. The company’s turnover is set out below:
Quarter ended Turnover
£
31 December 2020 355,000
31 March 2021 375,000
30 June 2021 400,000
30 September 2021 460,000
31 December 2021 (estimated) 480,000
Explain:
1) Whether the company will be required to leave the cash accounting scheme on 31
December 2021.
2) The implications for the company of leaving the cash accounting scheme.
7. Norzer Ltd was late in submitting the VAT returns and paying the VAT due for the periods below.
Quarter ended Unpaid VAT
£
31 July 2020 18,000
31 January 2021 24,000
30 October 2021 7,700
All other returns and payments were made on time.
Explain, with calculations, the implications for the company of filing the VAT returns late.
Page 3 of 19
, 8. Tim owns the freehold of a building comprising two floors.
The ground floor is let to Mark, a VAT registered trader, and it is used in Mark’s trade of repairing
and selling computer equipment. Mark’s lease has 10 months to run and he has indicated that he
will not been seeking to renew it.
The first floor is let to Susie as residential accommodation.
The building requires significant repairs and Tim has been quoted a price of £60,000 plus VAT.
1) Explain the implications for Tim should he decide to opt to tax the building.
2) State the deadline by which a person must notify HMRC that an option to tax has been
made.
9. Cameron carries on a trade making standard-rated supplies. On 1 October 2021, Cameron bought
plant and machinery, a debtor list and goodwill from a business in administration, paying £80,000
including VAT. At that time, it was thought that the transaction did not meet the conditions for
treatment as a transfer of a going concern (TOGC).
Explain the consequences for Cameron if it is later found that the transaction did meet the
conditions for treatment as a TOGC.
10. Winstonn Ltd acquired 65% of the Ordinary Share Capital of Agnez Ltd in September 2021. The
remaining shares are held by an unconnected individual. Both companies make wholly standard-
rated supplies and trade exclusively in the UK.
Explain:
1) Whether the companies meet the conditions to form a VAT group.
2) The consequences for both companies of forming a VAT group.
11. Tony will acquire the following shares in the next few days:
Company Seller Consideration
£
Bosmium Ltd Walter 12,300
Biron Ltd Imogen 980
1) Calculate, with explanations, the Stamp Duty payable by Tony.
2) Explain the procedure for having the stock transfer form for each purchase stamped.
12. On 1 February 2020, Ytali Ltd sold a commercial building to Npais Ltd for its market value of
£425,000. At that time, Qrai Ltd held 100% of the share capital of Ytali Ltd and 80% of the share
capital of Npais Ltd.
On 1 October 2021, Qrai Ltd sold its entire shareholding in Npais Ltd.
Explain, with calculations, the Stamp Duty Land Tax [Scots – Land and Buildings
Transaction Tax] implications of the above events.
Page 4 of 19
AWARENESS
November 2021
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.
• 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.
, Module A: VAT including Stamp Taxes
If you have entered for Module A you must answers Questions 1 – 12 and type your answers
between the question dividers 1 – 12.
1. Haggon Ltd was incorporated on 18 September 2021. It started to make wholly taxable supplies
on 1 October 2021 and registered for VAT with effect from 1 November 2021. Prior to the company’s
incorporation, a future shareholder paid for accountancy advice relating to the company’s trade.
Explain the further information required in order to determine whether Haggon Ltd may
recover the input VAT suffered on the accountancy advice.
2. Georgina makes standard-rated supplies. For the quarter ended 31 October 2021, her VAT
exclusive sales were £62,000.
In addition, in September 2021, Georgina gave four of her key customers a gift. The cost of each
gift was £105. The input VAT on the items was recovered in the quarter ended 31 July 2021.
Georgina’s purchases for the quarter were £18,000. This is before taking into account £180 for the
purchase of fuel in respect of a car used partly for business purposes. The VAT fuel scale charge
for the car for the quarter is £246.
All purchases are inclusive of standard rate VAT.
Calculate the VAT payable to HMRC for the quarter ended 31 October 2021.
3. Peter is a VAT registered trader. He recently opened a holiday park offering short breaks in luxury
tents. On arrival at the park, the customer is presented with an invoice showing the cost of the
serviced accommodation and a fixed charge for electricity. Peter does not provide any ancillary
travel services.
Explain the VAT treatment of the supply made by Peter.
4. Murmodon Ltd provides human resources services.
On 24 October 2021, Murmodon Ltd completed a one-off assignment for Hector. The company
issued an invoice on 30 October 2021. Hector paid the invoice on 2 November 2021.
Helen pays Murmodon Ltd a monthly retainer for providing a helpline service to her employees. On
28 October 2021, the company issued an invoice for the month of October 2021. Helen paid the
invoice on 3 November 2021.
Explain the tax point of the services provided by Murmodon Ltd to Hector and Helen.
Page 2 of 19
,5. During the quarter ended 30 October 2021, Sactuc Ltd suffered the following amounts of input tax
in relation to motor vehicles:
1) £2,000 on the purchase of a van. Private use of the van was insignificant.
2) £14,000 on the purchase of a car for use by the company’s Sales Director. It was used 85%
for business purposes.
3) £160 on repairs to the car used by the Sales Director.
4) £280 on monthly payments made under a two-year lease of a car for use by the marketing
manager. It was used 40% for business purposes.
5) £40 on hiring of a car for one day to replace the marketing manager’s car when
it was in the garage. The car was used for business and personal journeys.
Calculate, with explanations, the amount of input VAT the company may recover in respect
of the above transactions.
6. Celandi Ltd, which makes wholly standard-rated supplies, joined the cash accounting scheme in
2014. Its business has expanded in recent years, and it is expected to continue to grow in the
future. The company’s turnover is set out below:
Quarter ended Turnover
£
31 December 2020 355,000
31 March 2021 375,000
30 June 2021 400,000
30 September 2021 460,000
31 December 2021 (estimated) 480,000
Explain:
1) Whether the company will be required to leave the cash accounting scheme on 31
December 2021.
2) The implications for the company of leaving the cash accounting scheme.
7. Norzer Ltd was late in submitting the VAT returns and paying the VAT due for the periods below.
Quarter ended Unpaid VAT
£
31 July 2020 18,000
31 January 2021 24,000
30 October 2021 7,700
All other returns and payments were made on time.
Explain, with calculations, the implications for the company of filing the VAT returns late.
Page 3 of 19
, 8. Tim owns the freehold of a building comprising two floors.
The ground floor is let to Mark, a VAT registered trader, and it is used in Mark’s trade of repairing
and selling computer equipment. Mark’s lease has 10 months to run and he has indicated that he
will not been seeking to renew it.
The first floor is let to Susie as residential accommodation.
The building requires significant repairs and Tim has been quoted a price of £60,000 plus VAT.
1) Explain the implications for Tim should he decide to opt to tax the building.
2) State the deadline by which a person must notify HMRC that an option to tax has been
made.
9. Cameron carries on a trade making standard-rated supplies. On 1 October 2021, Cameron bought
plant and machinery, a debtor list and goodwill from a business in administration, paying £80,000
including VAT. At that time, it was thought that the transaction did not meet the conditions for
treatment as a transfer of a going concern (TOGC).
Explain the consequences for Cameron if it is later found that the transaction did meet the
conditions for treatment as a TOGC.
10. Winstonn Ltd acquired 65% of the Ordinary Share Capital of Agnez Ltd in September 2021. The
remaining shares are held by an unconnected individual. Both companies make wholly standard-
rated supplies and trade exclusively in the UK.
Explain:
1) Whether the companies meet the conditions to form a VAT group.
2) The consequences for both companies of forming a VAT group.
11. Tony will acquire the following shares in the next few days:
Company Seller Consideration
£
Bosmium Ltd Walter 12,300
Biron Ltd Imogen 980
1) Calculate, with explanations, the Stamp Duty payable by Tony.
2) Explain the procedure for having the stock transfer form for each purchase stamped.
12. On 1 February 2020, Ytali Ltd sold a commercial building to Npais Ltd for its market value of
£425,000. At that time, Qrai Ltd held 100% of the share capital of Ytali Ltd and 80% of the share
capital of Npais Ltd.
On 1 October 2021, Qrai Ltd sold its entire shareholding in Npais Ltd.
Explain, with calculations, the Stamp Duty Land Tax [Scots – Land and Buildings
Transaction Tax] implications of the above events.
Page 4 of 19
