Chapter 4: Accounting for VAT Flashcards
what information does a VAT registered business MUST keep?
- business and accounting records
- invoices issued and received
- cr/dr notes issued/ recieved
- VAT account summarising inputs and
outputs
how long should VAT records be kept for?
6 years
all records _____ be kept digitally
may
can a taxable person claim VAT if they do not have a valid VAT invoice?
no.
A purchase invoice for taxable supplies has just been processed.
what will be the effect on VAT?
Input tax will decrease
when can you issue a simplified invoice?
when the supplies are less than £250.00 including VAT
when do you NOT need an invoice to reclaim VAT?
if the expenditure is £25.00 or less including VAT
when should a modified invoice be issued?
when the supplies sold are more than £250.00
what is the reverse charge?
where the supplier does not charge VAT on the invoice and the customer pays and deducts VAT simultaneously through the VAT return.
what is a tax point?
the date which determines when the VAT must be accounted for to HMRC.
how do you identify when the tax point is?
the earliest of:
- goods made available (BASIC TAX point)
- invoice issued
- payment received
how do you identify the actual tax point?
if the basic tax point was the earliest date, check if the invoice was issued within 14 days . if it was, then the invoice date overrides the basic tax point and becomes the actual tax point.
what conditions are needed to make bad debt relief available?
- it has to be 6 months old or older
- the debt has been written off
- the VAT must have been paid to HMRC
