Chapter 8 - VAT and Corporation Tax Flashcards

1
Q

What are the main rates of VAT in the UK?

A
  • 0%
  • 20%
  • Some supplies are ‘exempt supplies’
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2
Q

Explain how the the VAT system works?

A

A VAT registered trader must charge customers output VAT on taxable supplies. Any input VAT (VAT paid on goods/services purchased) can be offset against output VAT (VAT charged on goods/services sold) any excess of output VAT is paid to HMRC. Any excess of input VAT is reclaimed.

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3
Q

What is the set limit that a trader must register for VAT?

A

A trader must register for VAT if they make taxable supplies over the previous 12 months of £85,000. Must notify HMRC within 30 days of the end of the month in which the limit was exceeded. Penalties apply if not done.

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4
Q

Name 4 exempt VAT supplies.

A
Insurance, 
finance, 
health, 
educations, 
burial and crematory services amongst others
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5
Q

Name 4 zero rated VAT supplies.

A
(Most) Food and drink, catering and restaurants not exempt, also if food kept warm in shops not exempt
books (printed), 
public transport, 
drugs & medicine, 
clothing for children
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6
Q

Over what level of turnover can firms elect to pay VAT on a flat rate scheme?

A

£150,000

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7
Q

What is the turnover limit for paying VAT on the flat rate scheme?

A

£230,000

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8
Q

How often should VAT returns be completed?

A

Every 3 months

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9
Q

What is the current rate of corporation tax?

A

19%

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10
Q

What was the rate of corporation tax in 2016/17

A

20%

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11
Q

Over what period is corporation tax paid?

A

This is charged on a strict accounting period basis rather than a tax year basis. These can not be more than 12 months.

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12
Q

Who pays corporation tax and on what?

A

Companies pay corporation tax on all their income and gains

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