11 - value added tax Flashcards
what is output and input VAT charged on
output vat - sales
input vat - purchases
what are two examples of no VAT transactions
wages and dividends
what are three examples of exempt supplies
rent, insurance, postal services
what is meant by the future prospects test
a person must register for VAT if there is reasonable grounds that taxable turnover in the next 30 days will exceed the threshold
what is the historic test for VAT registration
if at the end of any month, the taxable turnover in the previous month exceeds thethreshold and then the person must register for VAT
why is deregistration compulsory
if a person ceases to make taxable supplies and has no intention of making them
when is the basic tax point
the date on which goods are removed or made available to the customer, or the date on which services are completed
what are the three adjustements that affect the basic tax point and what does the new tax point become
if payment is received before the BTP, actual tax point becomes date of payment
if an invoice is issued before the BTP, actual tax point is the date of invoice
if an invoice is issued within 14 days of BTP, actual tax point is the date of invoice
how do you treat goods supplied on a sale or return basis for tax points
tax point is the earlier of adoption of goods or 12 months after the date of dispatch
what does the value of the fuel scale charge mean
this is the value of the VAT inclusive fuel, so divide to get the value of VAT
how do you treat the VAT on goods used personally as well
deduct all the input tax and account for output tax in respect of private use
deduct only the business proportion of input tax
how long before registration can you recover input VAT
4 years
is tax on UK customer entertaining irrecoverable or recoverable?
irrecoverable
who qualifies as a substantial trader
someone with a VAT liability of more than 2.3 million annually
what must substantial traders do regarding VAT paymetns
make payments on account of VAT for each quarter
when are payments on account for substantial traders and how much are they?
end of second and third months of the quarter
each payment is 1/24 of the total VAT liability for the previous yera
when is the balancing payment due for substantial traders on POAs
due with the VAT return at the end of the month following the end of the quarter
when is the VAT return due for annual accounting scheme
2 months after the end of the VAT year
what is the limit for the annual accounting scheme
value of taxable supplies excluding VAT is not expected to exceed 1.35 million
what is the deregistration limit for the annual accounting scheme
1.6 million
what happens with payments for people on the annual accounting scheme
nine interim payments at monthly intervals throughout the year
or 3 quarterly interim payments throughout theyear
what is the amount if a trader opts to make 9 monthly payments
10% of the total VAT liaiblity for the previous year
when is the payment due for traders on the annual accounting scheme that make monthly payments
end of 4th month with every month after that
how much are the payments if a trader chooses to make 3 quarterly payments
25% of the VAT liability last year
when are the payments due for traders on the annual accounting scheme that make quarterly paymetns
end of months 4, 7 and 10 of the annual accounting year
what is the registration limit for cash accounting scheme
value of taxable supplies excluding VAT in the following year is not expected to exceed 1.35 million
what are the two legal requirements to join the cash accounting scheme
must have submitted all VAT returns to date and paid outstanding VAT bill
must not be convicted of a VAT offence or a penalty in the previous 12 months
what is the range for flat rate scheme (percentage range)
4% to 14.5%
what is the registration limit for the flat rate scheme
annual taxable supplies excluding VAT do not exceed 150,000
what is the function of a simplified invoice and when is it given
less detailed invoice that is issued for supplies under £250
what is the function of a modified VAT invoice and when is it given
issued for retail supplies over £250
how long should records be kept for
6 years
