Communicating VAT and Payroll information Flashcards
Who will VAT reports be checked by to ensure accuracy, if working for a business (industry) ? P145
- Senior member of staff, owner, manager
Who will the accountant need approval from relating to VAT submission , if they are working for an accountancy practice ? P145
Client
Where will the accountant advise of the amount due to the HMRC on the VAT return ? P145
- Box 5 - draft VAT return
- date to be paid
What must happen with the wage reports and payroll in relation to reporting information to the relevant person ? P145
- appropriate person e.g. accountants - year end accounts
- approval before payroll submission / payment to employee, HMRC, pension providers , trade unions
What can happen to a business if it does not effectively communicate the time limits relating to submission of info / payments to the HMRC ?
- significant penalties and fines
What are payroll submissions made in ? P146
- RTI submission
Why is the timing of vat payments important for the cash flow of the business ? P147
- Quarterly submission - one month and 7 days
- payment collected - three working days
- prompt payment invoices = working capital
- Look at example
What effect does efficient payment of VAT have on the cash budget business ? P148
- Consider:
- output monthly cash inflow + quarterly payments monthly cash outflow = time between inflow and making payment = increased bank balance
- further improivement = tighter credit control
Aside from the VAT act 1994 , where else do the principles of VAT law originate from - 1st place P150
- Statutory instruments - rules and regulations
- authority of Acts of Parliment
- No passing an Act of Parliament
Aside from the VAT act 1994, where else to the principles of VAT law originate from - 2nd place ? P150
- VAT notices
- www.gov.uk
When are changes in VAT regulations most importantly change ? P150
- Period following budget
- ALSO VAT rates Variation - time to time
How do VAT rate chnnages affect the running of businesses ? P150
- Output tax calculation
- total prices - invoices, credit notes, price lists, price labels
- rate change timing = input claim effect
How do changes in the types of goods and services subject to VAT affect running of the businesses? P150
Extension - reduced rates
What is an exampe of payroll legislation that changes every year ? P151
- National minimum wage
- National living wage
- employers must pay appropriate
What is the most common and far reaching change to the VAT system ? P151
- Change - VAT rate
- zero rate = no change
- reduced rate = rare change
- standard rate = subject to change
What are the main reasons for a governnments to change the VAT rates ? P151
- Consumer spending in economy - e.g. increase = discouragment
- increase tax revenue = funding government spending
Dealing with VAT Standard rate change - what if the change takes effect on 1st April , and the customer pays after 1st April for goods received prior to this date? P152
- Sale before
- Original (lower) rate applies
Dealing with VAT Standard rate change - what if the change takes effect on 1st April , and the business issues a VAT on or after 1st April for goods supplied before the date ? P152
Business can choose - earlier lower rate
Dealing with VAT Standard rate change - what if the change takes effect on 1st April, and the vusiness provides services that started before 1st April but finish after 1st April ? P152
- Work done to 31st March = invoice lower rate
- Work done after 31st March = invoice higher rate
Dealing with VAT Standard rate change - what if the change takes effect on 1st April, and the business provides a continuous service such as leasing office space? P152
- Account VAT due - earlier of issues / receives payment
- higher rate charge - after 1st April
Dealing with VAT Standard rate change - what if the change takes effect on 1st April - how should businesses claim back the VAT charged by their suppliers ? P152
- normal way
- invoice received after rate for purchases before = VAT at original (lower) rate
How would a business using cash accounting scheme be affected by changes ?
- declare to hmrc based on payment received
- identify sales before changes
- charge vat on sales before 1st April - VAT lower rate
How does a business using a flat rate scheme deal with chages tro the scheme ? P153
- Revised percentage
- use - after change in standard rate
How does a business using the annual accounting scheme deal with changes to VAT scheme ? P153
No chnage
payment of instalments
