The Chartered Institute of Taxation
AWARENESS
May 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 correction 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 answer Questions 1 – 12 and type your answers between
the question dividers 1 – 12.
1. Pirrer Ltd commenced trading on 1 December 2020. It made the following sales, exclusive of VAT:
Month ended Standard-rated Zero-rated Exempt Total
£ £ £ £
31 December 2020 3,000 500 1,000 4,500
31 January 2021 11,000 500 1,000 12,500
28 February 2021 29,000 500 1,000 30,500
31 March 2021 18,000 500 1,000 19,500
30 April 2021 23,000 500 1,000 24,500
Standard-rated sales for April 2021 included £5,000 relating to the sale of plant and machinery used
in the company’s trade.
1) Explain, with calculations, whether the VAT threshold was breached by
30 April 2021.
2) State by when a company must notify HMRC that it has breached the registration
threshold.
You should only consider the historic test.
2. Barbara is a VAT registered trader. During the quarter ended 30 April 2021, Barbara gave away
goods to a number of people. Barbara had claimed input tax on the purchase of the goods.
State the information required to determine whether the gifts are exempt from the deemed
supply rules.
3. Saleem sells standard-rated products used in the construction industry. In April 2021, Saleem was
approached by a regular customer, Pete, who wished to buy some goods, and offered to undertake
some repairs to Saleem’s premises in part payment. Pete and Saleem agreed the value of the repairs
to be £1,000, including VAT.
Pete collected the goods on 30 April. On 1 May, Pete paid cash of £4,000 and carried out the building
work as the agreed full settlement for the goods. Saleem intends to raise the invoice on 12 May.
1) Explain when the tax point on the supply by Saleem occurs.
2) Calculate the VAT to be charged by Saleem on the supply.
Page 2 of 21
,4. Bellcob Ltd (a fully taxable company) incurred the following expenses during April 2021.
1) £1,000 for an event for UK customers held at a local theatre.
2) £2,400 for a team-building event attended by all sales staff.
3) £100 for a lunch attended by the company’s directors only.
4) £400 to repair a car owned by the company and made available to the Managing Director.
5) £300 for lease charges on a car provided to the sales manager, which is used partly for private
purposes.
All amounts are exclusive of VAT.
Explain the amount of input VAT, if any, that the company may recover in respect of the
above expenses.
5. Edsme Ltd’s results for the quarter ended 31 March 2021 were as follows:
Sales: £
Taxable 140,000
Exempt 28,500
Input VAT: £
Directly attributable to taxable supplies 3,800
Directly attributable to exempt supplies 1,400
Residual input VAT 600
Calculate, with explanations, the amount of input VAT that the company may reclaim for the
quarter ended 31 March 2021. Ignore simplified tests one and two.
6. Nina commenced trading as a photographer on 1 November 2020. She registered for VAT on the
same date. Nina joined the flat-rate scheme on 1 March 2021.
During the month ended 31 March 2021, Nina made sales totalling £7,200 and incurred expenses of
£3,000, made up of a computer costing £2,400 and photography supplies costing £600. All figures
are inclusive of VAT.
The flat-rate percentage for the photography sector is 11%. Nina is not a limited cost trader.
Calculate Nina’s saving for March 2021 from joining the flat-rate scheme.
Page 3 of 21
, 7. On 1 November 2020, Derek bought the freehold of a commercial building. Adelm Ltd has entered
into an agreement with Derek to rent part of the building. Rent of £4,000 and a service charge of
£300 will be payable by Adelm Ltd to Derek monthly, with effect from 1 June 2021. As a reflection of
the state of the market and to encourage Adelm Ltd to enter into the agreement, Derek has agreed
to make a one-off payment of £5,000 to the company.
Explain how the rent, service charge and one-off payment will be rated for VAT purposes
assuming that:
1) Derek has not opted to tax the building, and
2) Derek has opted to tax the building.
8. Nathan is a VAT-registered sole trader. He has agreed to sell his business, together with all of the
assets (including an unopted commercial property), to Riley. The business will be transferred as a
going concern.
Explain:
1) The information required from Riley in order to determine if the transfer of a going
concern provisions will apply with regard to the transfer.
2) Who will be responsible for the VAT affairs of the business for the period when it was
carried on by Nathan.
9. Lucinda has the following shareholdings:
Lucinda
100% 100%
Elcair Ltd Alepp Ltd
100% 40%
Deast GmbH Cotarr Ltd
All companies operate exclusively in the UK except for Deast GmbH which is based in Germany.
All companies make wholly standard-rated supplies.
Explain:
1) For each company, whether that company may form a VAT group with Elcair Ltd.
2) The possible advantages for the companies of a VAT group registration.
Page 4 of 21
AWARENESS
May 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 correction 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 answer Questions 1 – 12 and type your answers between
the question dividers 1 – 12.
1. Pirrer Ltd commenced trading on 1 December 2020. It made the following sales, exclusive of VAT:
Month ended Standard-rated Zero-rated Exempt Total
£ £ £ £
31 December 2020 3,000 500 1,000 4,500
31 January 2021 11,000 500 1,000 12,500
28 February 2021 29,000 500 1,000 30,500
31 March 2021 18,000 500 1,000 19,500
30 April 2021 23,000 500 1,000 24,500
Standard-rated sales for April 2021 included £5,000 relating to the sale of plant and machinery used
in the company’s trade.
1) Explain, with calculations, whether the VAT threshold was breached by
30 April 2021.
2) State by when a company must notify HMRC that it has breached the registration
threshold.
You should only consider the historic test.
2. Barbara is a VAT registered trader. During the quarter ended 30 April 2021, Barbara gave away
goods to a number of people. Barbara had claimed input tax on the purchase of the goods.
State the information required to determine whether the gifts are exempt from the deemed
supply rules.
3. Saleem sells standard-rated products used in the construction industry. In April 2021, Saleem was
approached by a regular customer, Pete, who wished to buy some goods, and offered to undertake
some repairs to Saleem’s premises in part payment. Pete and Saleem agreed the value of the repairs
to be £1,000, including VAT.
Pete collected the goods on 30 April. On 1 May, Pete paid cash of £4,000 and carried out the building
work as the agreed full settlement for the goods. Saleem intends to raise the invoice on 12 May.
1) Explain when the tax point on the supply by Saleem occurs.
2) Calculate the VAT to be charged by Saleem on the supply.
Page 2 of 21
,4. Bellcob Ltd (a fully taxable company) incurred the following expenses during April 2021.
1) £1,000 for an event for UK customers held at a local theatre.
2) £2,400 for a team-building event attended by all sales staff.
3) £100 for a lunch attended by the company’s directors only.
4) £400 to repair a car owned by the company and made available to the Managing Director.
5) £300 for lease charges on a car provided to the sales manager, which is used partly for private
purposes.
All amounts are exclusive of VAT.
Explain the amount of input VAT, if any, that the company may recover in respect of the
above expenses.
5. Edsme Ltd’s results for the quarter ended 31 March 2021 were as follows:
Sales: £
Taxable 140,000
Exempt 28,500
Input VAT: £
Directly attributable to taxable supplies 3,800
Directly attributable to exempt supplies 1,400
Residual input VAT 600
Calculate, with explanations, the amount of input VAT that the company may reclaim for the
quarter ended 31 March 2021. Ignore simplified tests one and two.
6. Nina commenced trading as a photographer on 1 November 2020. She registered for VAT on the
same date. Nina joined the flat-rate scheme on 1 March 2021.
During the month ended 31 March 2021, Nina made sales totalling £7,200 and incurred expenses of
£3,000, made up of a computer costing £2,400 and photography supplies costing £600. All figures
are inclusive of VAT.
The flat-rate percentage for the photography sector is 11%. Nina is not a limited cost trader.
Calculate Nina’s saving for March 2021 from joining the flat-rate scheme.
Page 3 of 21
, 7. On 1 November 2020, Derek bought the freehold of a commercial building. Adelm Ltd has entered
into an agreement with Derek to rent part of the building. Rent of £4,000 and a service charge of
£300 will be payable by Adelm Ltd to Derek monthly, with effect from 1 June 2021. As a reflection of
the state of the market and to encourage Adelm Ltd to enter into the agreement, Derek has agreed
to make a one-off payment of £5,000 to the company.
Explain how the rent, service charge and one-off payment will be rated for VAT purposes
assuming that:
1) Derek has not opted to tax the building, and
2) Derek has opted to tax the building.
8. Nathan is a VAT-registered sole trader. He has agreed to sell his business, together with all of the
assets (including an unopted commercial property), to Riley. The business will be transferred as a
going concern.
Explain:
1) The information required from Riley in order to determine if the transfer of a going
concern provisions will apply with regard to the transfer.
2) Who will be responsible for the VAT affairs of the business for the period when it was
carried on by Nathan.
9. Lucinda has the following shareholdings:
Lucinda
100% 100%
Elcair Ltd Alepp Ltd
100% 40%
Deast GmbH Cotarr Ltd
All companies operate exclusively in the UK except for Deast GmbH which is based in Germany.
All companies make wholly standard-rated supplies.
Explain:
1) For each company, whether that company may form a VAT group with Elcair Ltd.
2) The possible advantages for the companies of a VAT group registration.
Page 4 of 21
