ACCA · Question 19 · Value added tax (VAT)
Section B: Case 1 - QuantumLeap VR Ltd
Scenario: QuantumLeap VR Ltd is a virtual reality software developer. The company began trading on 1 January 2023. Its taxable turnover was £6,000 per month for the first 10 months. In November 2023, it secured a major contract, and taxable turnover jumped to £30,000 for November and £30,000 for December.
Question: QuantumLeap VR Ltd imports specialized 3D modeling services from a company based in the USA. How should QuantumLeap VR Ltd account for VAT on these imported services?
Answer options:
The US company must register for UK VAT and charge it to QuantumLeap.
No VAT is applicable as the services are outside the scope of UK VAT.
Apply the reverse charge mechanism, declaring both output VAT and input VAT on the same return.
Pay import VAT at the border before the services can be downloaded.
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