8 - BL - VAT & CT

Question 1

What is the charge to VAT?

Answer 1

• any supply of goods or services
• where it is a taxable supply
• made by a taxable person
• in the course or furtherance of any business carried on by that person.

Question 2

When is a person required to register for VAT?

Answer 2

• at the end of the month if their taxable supplies exceeded the VAT threshold in the previous 12 months.

OR

• at any time if there are reasonable grounds to believe that the value of their taxable supplies in a period of 30 days will exceed the VAT registration threshold

Question 3

What is the current VAT registration threshold?

Answer 3

£90,000

Question 4

A person can apply to be de-registered. What is the threshold?

Answer 4

£83,000

Question 5

What is Output tax?

Answer 5

The VAT charged by a business on its goods or services

Question 6

What is Input tax?

Answer 6

The VAT paid by a business on the goods or services it buys.

Question 7

What is the rate of standard VAT?

Answer 7

20%

Question 8

What are the different rates of supply that a business can make?

Answer 8

• Standard rated
• Reduced Rate
• Zero rated
• Exempt

Question 9

What is the rate of reduced rate VAT?

Answer 9

5%

Question 10

How often are VAT returns submitted?

Answer 10

Every 3 months

Question 11

What is the due date for a VAT return?

Answer 11

1 month and 7 days after the end of the period.

Question 12

What is the threshold for annual accounting / cash accounting for VAT?

Answer 12

£1,350,000

Question 13

What is the threshold for the flat rate scheme for VAT?

Answer 13

taxable turnover not exceeding £150,000

AND

total annual turnover not exceeding £230,000

Question 14

If there is no VAT on the invoice for a vatable supply, the invoice is assumed to be inclusive of VAT true/false?

Answer 14

True

Question 15

When does the financial year for companies end?

Answer 15

31 March

Question 16

What is the main rate of CT

Answer 16

25% over £250,000

Question 17

What is the small profits rate and when does it apply?

Answer 17

19% profits do not exceed £50,000

Question 18

What is the percentage WDA for CAs?

Answer 18

18%

Question 19

What is the level of CA AIAs?

Answer 19

£1,000,000 = 100% deduction

Question 20

What is the Super-deduction?

Answer 20

130% of expenditure without limit up until 31 March 2023. Does not include a lot of items

Question 21

Is there an annual exemption for CGT for companies?

Answer 21

No, but there is indexation frozen at 31.12.2017

Question 22

What is Substantial Shareholding Exemption and when does it apply?

Answer 22

• No tax due when a company disposes of shares in a trading company
• must hold 10% of the ordinary shares for a consecutive period of 12 months within the last 6 years.

Question 23

When does Rollover Relief apply?

Answer 23

• company disposes of qualifying business assets and buys another asset (includes members of group)
  -sole trade/p-ship disposed of qualifying business assets and buys another qualifying business asset.
• individual owns a business asset and sells it buying another qualifying asset and both assets:
  
  • a company which is the individuals personal company; or
  • a partnership of which the individual is a partner

Question 24

What are qualifying assets for Rollover relief?

Answer 24

• Land & Buildings
• Goodwill
• Fixed P&M
• Ships and hovercraft
• aircraft, and
• Lloyd’s syndicate capacity

Question 25

When must the replacement asses be purchased for Rollover relief?

Answer 25

12 month before or 3 years after the sale of the old asset.

Question 26

What happens if the new asset costs less than the asset disposed of?

Answer 26

Rollover is restricted by the difference in cost

Proceeds from land sale £200,000
Costs £120,000
Gain £80,000

New land £180,000
less rollover (80k - (200k-£180k) £60k
Base cost £120,000

Question 27

What happens if the replacement asset is

Question 28

What is the CT charge on dividends received?

Answer 28

£0

Question 29

What is the TTP threshold for paying CT?

Answer 29

£1.5m
(Below this annual payments, over this quarterly payments

Question 30

When is CT due for TTP less than £1.5m?

Answer 30

9 months and 1 day after the APE

Question 31

When is CT due for TTPmore than £1.5m?

Answer 31

Quarterly

Question 32

When is a CT return due ?

Answer 32

12 months after the AP

Question 33

How can CT trading losses be used in the current and previous years?

Answer 33

• against income AND gains of the same year
  IF CANT BE USED IN CURRENT YEAR;
• carry back to prev. accounting period against income AND gains (if carrying on same trade)
• claim within 2 years

IF ceases trading:
- loss in last 12 months can be carried back against income and gains for 3 prior years

Question 34

How can CT losses be used in future years?

Answer 34

Automatically carried forwards
- set off restricted to £5m after which only 50% of profits may be offset (inc cap losses)

Question 35

How much interest can a company deduct?

Answer 35

if greater than £2m can only claim interest against up to 30% of income receipts

Question 36

What is a close company?

Answer 36

Company controlled by:
- 5 or fewer participators, or
- any number of participators who are also directors

BUT NOT IF:
- shares are quoted on a stock exchange, or
- cannot be controlled without including a non-close company

Question 37

Which loans are not caught by s.455?

Answer 37

• loans for goods or services under normal terms / 6 months
• loan made in ordinary course of trade of money lending
• loan of £15,000 or less to a person who works for the company but has less than a 5% interest (shares or winding up) in the company

Question 38

How can capital losses be used by a company?

Answer 38

• Can offset against gains in current or
• future years (subject to £5m / 50% restrictions).
• can’t offset against income
• can’t carry back