24 VAT: Outline

Question 1

Can a trader making exempt supplies apply for VAT?

Answer 1

No

Question 2

Can a trader making zero-rated supplies apply for VAT?

Answer 2

Yes

Question 3

What is the historic turnover test?

Answer 3

At the end of each month, the trader must look at the cumulative total of taxable supplies for the last 12 months, or since commencing trade, whichever is the shorter

Question 4

When must a trader notify HMRC in a historic turnover test?

Answer 4

Within 30 days, registration is effective from the first day of the second month after taxable supplies exceed threshold

Question 5

What is the future prospects test?

Answer 5

This test is considered at any time, when taxable supplies in the next 30 days in isolation are expected to exceed £83,000.

Question 6

When must a trader notify HMRC in a future prospects test?

Answer 6

Before the end of the 30 days, registration effectiqve from the beginning of the 30 day period.

Question 7

How is a VAT group treated?

Answer 7

Treated as if it is a single company for the purposes of VAT. Group registration is optional; not all members of the group have to join the VAT group.

Question 8

How is group vat return treated?

Answer 8

The representative member submits a single VAT return covering all group members, but all companies are jointly and severally liable for the VAT payable.

Question 9

What are advantages of group registration?

Answer 9

VAT on intra group supplies eliminated

One return required

Question 10

What are disadvantages of group registration?

Answer 10

All members remain jointly and severally liable

A single return may cause administrative difficulties collecting and collating information

Question 11

What can you claim for pre registration VAT?

Answer 11

Goods in inventory - not been acquired more that 4 years

Services - six months prior

Question 12

When does a person need o compulsory deregister?

Answer 12

Within 30 days of ceasing to make taxable supplies

VAT is cancelled from the date of cessation or a mutually agreed later date

Question 13

What is the amount that is waved on reregistration?

Answer 13

£1,000

Question 14

VAT on sale is treated how?

Answer 14

Normal taxable supply - charge output VAT on assets transferred.
Going concern - not treated as supply

Question 15

What are the conditions for transfer of going concern?

Answer 15

1. The business is transferred as a going concern.
2. There is no significant break in the trading.
3. The same type of trade is carried on after the transfer.
4. The new owner is or is liable to be registered for VAT, immediately after the transfer.

Question 16

What is the basic tax point?

Answer 16

Goods - when collected, delivered or made available

Service - When performed

Question 17

What is the actual tax point?

Answer 17

1. calculate BTP
2. On or before BTP has an invoice been issued or payment?
   - Yes - ATP earlier date
   - No - invoice within 14 days?
   - Yes? ATP = Invoice
   - No? - BTP

Question 18

How is goods taken for own use treated?

Answer 18

• Replacement value of the supplies

Question 19

How are gifts treated?

Answer 19

Taxable supplies - except if goods to the same person cost less than £50 or business samples
Services are not taxable

Question 20

What can’t you claim VAT on?

Answer 20

Business Entertaining - (overseas allowable)
Motor cars - except if 100% business use
Leased? - 50% where private use

Question 21

How is a fuel scale charge treated?

Answer 21

As output VAT

Question 22

How do you get relief for impairment losses?

Answer 22

Must be at least 6 months old from due date and be written off. Must be made within 4 years and six months of being due. added to input VAT