ExpertEasy2 marksMultiple Choice
ACCA · Question 13 · Value Added Tax (VAT)
Section A: Objective Test
Which TWO of the following are consequences of two or more companies forming a VAT group?
Section A: Objective Test
Which TWO of the following are consequences of two or more companies forming a VAT group?
Answer options:
A.
Intra-group supplies of goods and services are disregarded for VAT purposes.
B.
Each company in the group must submit its own separate VAT return.
C.
All members of the VAT group are jointly and severally liable for the VAT debt of the group.
D.
The VAT registration threshold applies separately to each individual company in the group.
How to approach this question
Recall the administrative and legal effects of VAT grouping: single return, disregarded internal supplies, and joint liability.
Full Answer
When companies form a VAT group, they are treated as a single taxable person for VAT purposes. The representative member submits a single VAT return for the whole group. Intra-group supplies are disregarded (no VAT is charged on them). However, a major consequence is that all members of the group become jointly and severally liable for any VAT debts owed by the group.
Common mistakes
Believing that group companies still file individual returns or retain limited liability for the group's VAT.
Practice the full ACCA TX — Taxation Practice Exam 1
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