26. VAT: overseas Flashcards
When do VAT returns have to be submitted by?
What does your VAT liability need to exceed to qualify for payment on account? When are these due?
On what?
1 month and 7 days after period end.
£2,300,000. Due on month end 2 and 3 and relate to 1/24th of the annual VAT liability of last year
VAT repayments are usually made?
If VAT was overpaid, what time frame do traders have to reclaim?
10 days
4 years
What must a detailed VAT invoice include? (12)
- VAT registration number
- Date of issue
- Tax point
- Customer’s name and address
- Description that identifies goods or services supplied and quantity supplied
- Rate of VAT
- Supplies name and address
- Sequential and unique identifying number
- Amount payable excluding VAT
- Total VAT exclusive amount
- Amount of VAT payable
- Rate of any discount offered
What does a simplified VAT invoice need to include? (5)
When can you use a simplified VAT invoice?
An invoice can be simplified where supplies are less than £250 (VAT inclusive)
- Suppliers name, address and VAT registration number
- Date of supply
- Description to identify goods/services
- Amount payable (inc. VAT) for each rate of VAT
- VAT rate applicable
How are late payments or filing dates penalised?
First default starts surcharge period, 12 months.
In surcharge period:
First default: 2% of VAT due (if less than £400, w/off)
Second default: 5% of VAT due, (if less than £400, w/off)
Third default: 10% (or £30 if greater)
Fourth default: 15% (or £30 if greater)
Errors on VAT returns: how are these penalised?
If discovered by taxpayer:
De minimis limit of error is the greater of:
• £10,000
• 1% of turnover between £10k and £50k.
- If de minimis, include on next return.
- If not, separate notification.
If discovered by HMRC:
- Have 4 years to raise assessment (or 20 years if believe to be deliberate)
- If taxpayer does not agree, can appeal to tribunal within 30 days or request another officer to review.
Where is default interest charged? (2)
What is it capped at?
- When HMRC raises assessment
- Where taxpayer voluntarily discloses error exceeding de minimis
Can’t be charged for longer than 3 years from offence
What is the annual accounting scheme?
When does it have to be filed by?
How are payments formulated? When are they due?
What conditions must be met to be eligible? (3)
One VAT return annually.
Filed two months after y/e.
Payments of 10% from month 4 to 12 and the balancing payment 2 months after (when return is filed)
Payments due by end of month
- Up to date with returns
- Trader income cannot exceed £1,350,000 (excludes VAT and capital assets)
- Must ;eave scheme if trader income above £1,600,000
How does the cash accounting scheme work?
Same conditions as annual scheme to be eligible
Tax point becomes cash receipts and payments rather than invoices received and sent.
Advantages (2) and disadvantages (2) of cash accounting scheme?
+ business selling on credit don’t have to pay VAT until actually received money from customer
+ relief for impaired debts
- recovery of input VAT delayed
- not suitable for cash sales or zero-rated businesses due to delay in input tax recovery
How does the flat rate scheme work?
What do you need to satisfy to be eligible? (2)
% of all taxable supplies and exempt supplies but not capital items.
- taxable turnover over 12 months not over £150,000 inc. VAT
0 must leave scheme if taxable turnover exceeds £230,000 inc. VAT in 12 month period.
How do you deal with goods sold/purchased in the EU?
Sold to EU: dependent on customer.
If VAT registered in own country, 0%. If not VAT registered, 20%
Bought from EU: Charge as input VAT and output VAT
How do you deal with goods sold/bought outside of the EU?
Exports always 0 rated.
Imports charge as input and output VAT.
How do you deal with services bought/sold from inside and outside the EU?
Supply of service outside UK: outside scope of VAT - no charge.
Service bought overseas: charge as input and output VAT
