Extras And Things I Got Wrong In Tests

Question 1

Output

Answer 1

Sales and all other outputs EXCLUDING vat

Question 2

Input

Answer 2

Purchases and all other inputs EXCLUDING vat

Question 3

How many VAT returns per year:

Flat rate scheme.
Cash scheme
Annual accounting scheme

Answer 3

Flat rate scheme. (4)
Cash scheme (4)
Annual accounting scheme (1)

Question 4

When calculating turnover amount for registration what to remember…

Answer 4

It’s ‘taxable’ supplies… this includes zero-rated supplies

Question 5

Flat rate scheme - how to calculate?

Answer 5

Total (Vat inclusive) Sales x flat rate.

Do not deduct zero-rated supplies
(Do not deduct input amounts)

Question 6

When dealing with over and under payments from previous returns … what to do ?

Answer 6

Underpayment - Box 1

Overpayment - Box 4

Both …. net off figure first and then treat as under/overpayment as appropriate.

Question 7

What to remember about Box 2

Answer 7

Even though it comes under Box 1 sales …
This is about ACQUISITIONS.
(In one practice I calculated VAT and put EC sales here..)

We only use notional vat on EC purchases
Box 1 - Vat due on EC purchases that are Services (gets added to our
sales vat figure so is hidden)
Box 2 - Vat due on EC purchases of Goods (and related costs like deli)
This is the only amount in box 2
Box 4 - This is the reclaiming amounts and we add both the EC amounts
from above here so they cancel each other out.

Question 8

What to remember about simplified vat invoice

Answer 8

Cannot issue if there are ANY exempt supplies included

Question 9

Does a proforma need to show suppliers VAT number?

Answer 9

YES

Question 10

Tax point date for goods supplied to another business in the EU

Answer 10

The earlier of the date on the invoice or the 15th of the month following the month of supply.

Question 11

In the flat rate scheme how to calculate amount..

Answer 11

Take total turnover…

Including VAT
including EXEMPT !!!!!

Multiply by applicable flat rate.

(Remember to check if it’s limited cost biz)

Question 12

Limited cost business if…

Answer 12

Expenditure on goods INCLUDING vat is …..

Less than 2% of turnover INCLUDING vat.

Or

Less than £1000 p/a (including vat) so £833.333333 net.

Question 13

MTD for periods …

Answer 13

That STARTED on or after 01 April 2019

Question 14

Bad debt relief … what to remember?

Answer 14

My instinct is put it in box 1 if correcting a wrong sales amount..

This is wrong … must think of it as a RECLAIM and put in box 4.

Question 15

Look out for wording
Acquisitions for EU purchases / Imports for outside EU
EU despatches for EU sales / Exports for outside EU sales.

Answer 15

.

Question 16

Watch out for a question about a changing VAT rate…

Answer 16

Read carefully …

Remember don’t have to change prices to customers … can pocket or absorb the difference in vat amount.

Question 17

Really need to watch for silly mistakes

Answer 17

We put too much input tax on prev (decimal place error) but I added instead of deducting the correction to next periods return.

I got a due date wrong… put 7th of the month immediately after the period end instead of adding a month plus 7 days…

Question 18

Flat rate scheme how to check eligibility

Answer 18

TAXABLE turnover (excluding VAT) must not exceed £150k

Question 19

If didn’t register for vat on time and now have to back pay on sales … how to handle?

Answer 19

Treat the sales as having been VAT inclusive and so divide by 6 (assuming they were standard rated)

Question 20

Really watch corrections in VAT returns… what to remember?

Seems inconsistency eg. Told missed some purchases last return so I corrected box4 …. but Osborne answer also corrected box 6

One comment on forum indicated there will be no ambiguity in exam…

Answer 20

If you’re correcting a previous period just adjust box 1 and 4..

If it’s in the current period correct all the boxes.. eg the example where a van was sold (with vat correctly charged) but gross amount was entered as a sale. I believe if it was a previous period would just have adjusted box 1 to add the vat…. but if in this period need to adjust box 6 downwards by the vat amount also.

Question 21

Need to read up on invoicing on Continuous basis

Answer 21

.

Question 22

From Osborne practice 3 task 6 it appears when you buy something eg a car that you can’t claim vat on you still on,y put the net purchase price in box 7 …. you do not ‘pretend’ there was no vat and put the gross in. I correctly adjusted box 4 downwards to not claim vat on a car but I also adjusted box 7 upward by the same amount which was wrong

Answer 22

.

Question 23

Got to be so so so careful with corrections!

What to really watch out for?

Answer 23

I was correcting a Credit note from a supplier and treated it as an invoice…

Really need to check check check for this and not make really stupid mistakes!

Question 24

Failure to register = a business reached threshold 2 months ago and hasn’t registered
Civil penalty or Late registration penalty depending on which bit of ref material you read.

Answer 24

There are 2 bits in the ref material.

6.4 Failure to register. (In the registration section)
A biz which fails to register when it is required to do so may face a civil penalty.

20.5 Penalty for late registration. (In the penalties section)
Failure to register for vat with HMRC at the right time may make a business liable to a late registration penalty

Question 25

Only companies have to register for MTD

Answer 25

False

Question 26

When calculating businesses taxable turnover what to include/ exclude?

Answer 26

Include standard, reduced and zero (remember zero is taxed at zero %)

Exclude exempt.

Question 27

Keep slipping up on credit notes from supplier … worth a check through my exam specifically to check this point ….

Answer 27

.

Question 28

How to treat a reference in exam to a ‘deposit paid to a supplier’

Answer 28

As if it was an invoice from a supplier

Question 29

From AAT ass 2

Biz operating flat rate … if it changes its business type ?

Answer 29

Flat rate must be changed to appropriate.

Ie it does not revoke immediately

Question 30

In exam …. final checks

Answer 30

WATCH out FOR SNEAKY tricks
Credit notes from suppliers !!

CHECK didn’t put PENCE in boxes 6-9 !!!!!

DOUBLE-CHECK SUMS
Write out content of VAt return boxes so can double-Check sums… in one practice I made a silly error just by adding purchases returns vat to purchases vat instead of subtracting it….. could have picked up this error easily.

Really check WORDING

Use the REFERENCE … remember might be more than 1 bit relevant eg. With failure to register example.

Question 31

Services supplied on continuous basis over period in excess of a month but invoices are being issued regularly throughout the period

Answer 31

A tax point is created every time an invoice is issued or a payment is made, whichever happens first.