SCENARIO: Titanium Forge Ltd (TFL) is a heavy manufacturing company producing industrial valves. For the year ended 31 March 2024, TFL had augmented profits of £2.2 million. TFL owns 100% of the ordinary share capital of IronWorks Ltd, a UK resident company. During the year, TFL imported £500,000 of specialized machinery from Germany and purchased £1.2 million of new heavy plant machinery in the UK.
QUESTION: How should TFL account for the VAT on the £500,000 machinery imported from Germany?
ACCA · Question 20 · Value added tax (VAT)
SCENARIO: Titanium Forge Ltd (TFL) is a heavy manufacturing company producing industrial valves. For the year ended 31 March 2024, TFL had augmented profits of £2.2 million. TFL owns 100% of the ordinary share capital of IronWorks Ltd, a UK resident company. During the year, TFL imported £500,000 of specialized machinery from Germany and purchased £1.2 million of new heavy plant machinery in the UK.
QUESTION: Which of the following is a requirement for TFL and IronWorks Ltd to form a VAT group?
Answer options:
Both companies must make exclusively zero-rated supplies
Both companies must be established or have a fixed establishment in the UK, and be under common control
They must share the same accounting reference date
IronWorks Ltd must have taxable turnover exceeding £85,000
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