Chapter 2: VAT basics Flashcards
what is a taxable person?
an individual or business required to register for VAT
give an example of a zero-rated item.
non luxury food
what is the historic turnover method?
check at the end of each month if the total taxable turnover over the previous 12 months exceeds £85,000
what is the future turnover method?
each day check if the total taxable turnover over the next 30 days exceeds £85,000
what is taxable turnover?
the VAT-exclusive value of all zero, reduced and standard rated supplies
what is the VAT registration threshold?
£85,000
what is the VAT deregistration threshold?
£83,000
can a business voluntarily register for VAT?
yes
what is an advantage of VAT registration?
you can recover input VAT
what is an disadvantage of VAT registration?
risk of getting penalties on errors
what is the cost to a business making exempt supplies?
the gross amount
what is the cost to a business making taxable supplies?
the net amount
for a historic test, when is registration effective from?
start of the month following the end of the 30 day notification period
for a future test, when is registration effective from?
start of the 30 day period
what happens if a business fails to register for VAT?
they are still taxed.
