You are the tax advisor for the Chad Plc trading group; Chad Plc has a wholly owned UK subsidiary Joy Ltd. Joy Ltd owns a wholly owned foreign subsidiary Royce Inc. Joy Ltd has a large trading loss that is available for group relief.

Chad Plc trades mainly in the UK and is a UK resident company. It purchases components from subsidiary companies to be assembled into finished products and then exports them to Canada.

Chad Plc has a permanent establishment in the country of Utopia. The profits realised in Utopia are subject to 14% Utopian business tax.

There is no double tax treaty between the UK and the country of Utopia.

The taxable profits of Chad Plc for the year ended 31 March 2020 are as follows:

Trading profit in the UK	480,000
Trading profit in Utopia (gross) (before deduction of 14% Utopian tax)	70,000
Taxable total profits	550,000

The above profit is after charging cost of goods acquired from Royce Inc of 120,000, this includes a 20% mark-up on production costs.

Joy Ltds trade loss is after charging cost of goods acquired from Royce Inc of 140,000, this includes a mark-up of 40%.

Royce Inc charges customers outside of the group a standard 30% mark-up.

You are required to:

Write a memorandum to the board of directors addressing the following matters:

1. Explain whether the group should consider making a group registration for VAT purposes.

2. If Chad Plc does not make a group relief claim explain the amount of tax and the relevant due dates that arise as a result of Chad Plcs profit.

3. Calculate the maximum amount of group relief which Chad Plc would need to receive for the year ended 31 March 2020 such that none of its double tax relief in respect of the Utopian tax would be wasted and its UK corporation tax payable would be nil.

4. Outline any UK tax consequences for the group of the pricing policy used by Royce Inc when selling components to the group companies.