F - VAT Flashcards
what is output VAT?
this is vat that has been charged by the business on the supply of goods or services and is payable to hmrc
What is input VAT?
this is vat that has been charged to the business on purchases of goods or services and is reclaimable from HMRC.
How do we determine if a business is subject to compulsry registration for vat?
Apply historic or future turnover tests
Historic - turnover in the last 12 months exceeds the threshold (£85k) must register within 30 days of EOM threshold is exceeded in.
Future - The next 30 days turn over will exceed the threshold, must register by the end of the 30 day period.
What is included in taxable supplies?
All sales excluding VAT, exempt supplies, items outside the scope of VAT and sales of capital assets.
Can VAT be recovered for goods and services pre registration?
yea;
Goods - Acquired for business purposes, not sold or consumed prior to registration, and acquired 4 or less years prior to registration.
Services - Supplied for business purposes within 6 months of the registration date.
When can companies for a VAT group?
2 or more companies can form a vat group if:
one company controls 50% or more of the others or
the companies are under common control.
What happens when a vat group is formed?
Representative member is appointed - whois responsible for accounting for VAT
representative submits a single return for the group.
All group members are jointly and severally liable for VAT payable by the group
No vat is accounted for in intra group supplies.
when can a company de register for VAT
Compulsory :
cease supply of taxable supplies - notify hmrc within 30 days, de reg is effective from date of cessation
Voluntary - if taxable supplies in the next 12 months will not exceed £85K, de reg effective from date of request.
What is the effect of deregistering for vat?
Output taxxx must be accounted for on all non current assets and inventory held at the date of de reg on which a deduction for input tax has been made.
final tax liability is waived if less than £1000.
How is vat dealt with on the sale of a business?
Either as a normal taxable supply or transfer of a going concern;
ToGC - if all conditions are met, is not taxable;
No change in trade
no significant break in trade
transferee is/becomes vat registered after transfer
Business is transferred as a going concern
what is the basic tax point?
Goods - when collected/ delivered/ made available to the customer.
services - when performed
special rules applying to this;
where there is a continuing supply TP is earlier of invoice date and date payment is received.
Goods on sale or return - adoption of goods by the customer or 2 months after date of despatch.
When will actual tax point override basic tax point?
If a tax invoice was issued or payment received before the BTP then the invoice/payment date is the ATP
A tax invoice is issued within 14 days of the BTP, invoice date is ATP
What about VAT on discounts?
VAT is calculated on the actual price paid (after any discount taken)
Is the VAT on goods taken for own use?
Yes output tax must be accounted for on the cost of replacing the goods.
Is there VAT on gifts?
these are treated as taxable supplies at replacement value unless;
The gift is for a value fo less than £50 in a 12 month period to the same person or
Is trade samples.
Gifts of services are not taxable supplies.
