Corporate Taxation Flashcards
When is VAT charged?
Any supply of goods or services made in the UK; where it is a taxable supply; made by a taxable person; in the course or furtherance of any business carried on by that person.
What is a supply of goods or services?
Any supply made in the UK of goods or services done in return for consideration.
What is a taxable person?
A person who is or is required to be registered for VAT purposes. Includes individuals, partners, companies, unincorporated organisations.
When is a person required to be registered?
At the end of any month if the value of their taxable supplies in the period of one year or less has exceeded the VAT registration threshold (90k)(person must notify HMRC within 30 days of the end of that month and will be registered from the beginning of the second month after the taxable supplies went over the threshold).
OR
At any time if there are reasonable grounds for believing that the value of their taxable supplies in a period of 30 days then beginning will exceed the VAT REGISTRATION THRESHOLD (person must notify HMRC within 30 days and will be registered from the beginning of the 30 days).
Can also register voluntarily - meaning that input VAT will be recovered, but business will have to charge output VAT on supplies of goods and services to its customers).
How can a VAT registered person de-register?
May apply to have the registration cancelled and accordingly cease to be taxable where value of future annual taxable supplies will not exceed the 88k deregistration threshold.
What is the output tax?
VAT chargeable by a business when making a supply of goods or services.
What is input tax?
VAT paid by a person on goods or services supplies to the person. Related to VAT ‘brought in’ by the person.
Whats the standard rate of VAT?
20%
What are the four types of supply that a business can make?
Standard rated, reduced rated, zero rated, exempt.
When would something be given reduced rate VAT? How much is reduced rate?
Limited to types of supply like domestic heating and power, installation of mobility aids for the elderly, smoking cessation products and Childs car seats - 5%
What are zero-rated supplies?
Include food within certain categories, sewerage and water, books and newspapers, talking books for the blind, new houses and the construction of new houses, public transport and children’s clothing.
These can still recovered VAT suffered on inputs, but have 0% rated chargeable outputs.
What is exempt from VAT?
Include provision of insurance, finance, education and health services, sale of land and buildings.
How must you account for VAT to HMRC?
VAT invoice - taxable business making a standard or reduced rate supply of goods or services to another taxable business must supply customer/client with VAT invoice within 30 days of the supply and keep a copy. HMRC carried out regular inspections of businesses.
VAT return - taxable businesses must submit a VAT return online to HMRC every three months. Due date is usually within one month and seven days after the end of the VAT period. Return must show the total output tax charged on the making of taxable supplies during that VAT period less the total input tax attributable to the making of taxable supplies. Businesses that normally pay more than £2.3 million a year to HMRC in VAT must make monthly payments on account and then pay the balance when submitting the quarterly VAT return.
When is corporation tax payable?
All income profits and chargeable gains of a body corporate that arise in its accounting period.
25% for companies with TTP greater than £250,000. Marginal relief down to £50k, where it is 19%.
How is TTP calculated?
Chargeable gains (sale proceeds -allowable expenditure; indexation allowance, capital/trading losses) + Income profits (Income receipts - deductible expenditure, capital allowances, trading losses).
