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Indirect taxes Flashcards

1
Q

What is VAT charged on?

A

Sale of taxable supplies by a taxable person.

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2
Q

Who is a taxable person?

A

A sole trader, partnership, limited company, club or association making taxable supplies.

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3
Q

What is a taxable supply?

A

A taxable supply is one on which output VAT is chargeable and input VAT can be recovered and will be zero-rated, reduced-rated or standard-rated.

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4
Q

How does a business reclaim VAT for an employee/owners business and private use vehicle.

A

Recover all VAT then charge a rate of output VAT depending on the CO2 rating of the car.

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5
Q

What is a multiple supply?

A

Where the individual elements within the supply that are treated separately for VAT.

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6
Q

What is a single supply?

A

Where there is just one supply although it might be made up of lots of things.

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7
Q

What is a partially exempt trader?

A

Anyone who makes taxable supplies and exempt supplies.

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8
Q

What does a VAT return look like?

A 
£    
Output VAT        X
Input VAT          (X)
                            -
Net payment/
repayment      X/(X)
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9
Q

What are 4 exempt property transactions?

A
  • Sale of bare land.
  • Lease of a building.
  • Sale of old (>3yrs) commercial buildings.
  • Sale of existing residential buildings.
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10
Q

What is a zero-rated property transaction?

A

-Construction and sale of new residential buildings.

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11
Q

What are 3 standard-rated property transactions?

A
  • Construction of commercial building.
  • Sale of new (<3yrs) commercial buildings.
  • Work on existing residential or commercial buildings.
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12
Q

What is a partially exempt trader?

A

If a trader makes both taxable and exempt supplies not all input VAT can be reclaimed.

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13
Q

What is the “simplified test”?

A

If a trader passes test 1 OR 2 they can treat themselves as “de minimis” and recover all input VAT.

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14
Q

Where can you find test 1 and 2?

A

HTT.

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15
Q

page 58/59 summary on bathroom!!

A

!

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16
Q

What companies are eligible to be treated as members of a VAT group? (2)

A
  • If one of them controls >50% of the others, or

- One person controls >50% of all them.

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17
Q

Can a non-corporate entity such as a sole trader or partnership be included within a VAT group?

A

Yes, if it’s comprising of UK companies that it controls.

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18
Q

What are 4 consequences of VAT group registration?

A
  1. One company is appointed as the representative member.
  2. The representative member submits one VAT return for the group and makes payment.
  3. No VAT on intra-VAT group supplies.
  4. All VAT group members are jointly and severally liable for the group VAT.
19
Q

What is the “Option to tax”?

A

The owner of commercial land and buildings can opt to waive the exemption from VAT.

20
Q

What are the two implications of opting to tax?

A
  1. Standard rate VAT must be charged on any subsequent:
    - Lease of the building.
    - Sale of the building within 20 years of the OTT.
  2. Input tax relating to the supply can be recovered.
21
Q

The election is made(option to tax)… (on what, by who and for how long)

A
  • On individual buildings.
  • By an individual party and is non-transferable.
  • Is irrevocable for 20 years, after a 6 month cooling off period.
22
Q

What is the capital goods scheme?

A

Allows businesses to recover input VAT on certain assets (HTT).

23
Q

What happens if taxable supply % changes after acquisition (Capital Goods Scheme)? What is the formula?

A
  • An adjustment is required each year until the end of the adjustment period found in HTT.
  • Total Input/10 or 5 year x (TS% now - TS% on initial recovery)
24
Q

When an asset is disposed of under the capital goods scheme during the adjustment period what are the 2 steps?

A
  • The annual adjustment for use is made as normal in the year of disposal.
  • One further adjustment is made using-100% if the disposal was taxable and 0% if the disposal was exempt. (divided by years remaining in the scheme)
25
Q

What are 3 consequences of the “Flat Rate Scheme”?

A
  • Output VAT due to HMRC is calculated by applying a fixed rate percentage.
  • No input VAT is seperately recovered so no input VAT records need to be kept.
  • The flat rate percentage depends on category of business (HTT)
26
Q

What are the t&cs of the flat rate scheme?

A

See HTT.

27
Q

How does VAT affect exports outside of the EU?

A
  • Supply is zero-rated provided the seller holds evidence on how and where the export was made.
  • Customer accounts for output and input sales tax in own country.
28
Q

How does VAT affect imports from outside of the EU?

A
  • Importers account for VAT as they bring goods into their own country.
  • If importer is VAT registered can recover this input VAT on the next VAT return subject to normal recovery rules.
29
Q

What is stamp duty? For shares.

A

0.5% x consideration when buying shares. Nearest £5 and no charge if consideration is under £1,000.

30
Q

What is stamp duty reserve tax?

A

For paperless transfer of shares/securities. 0.5% x consideration. No rounding.

31
Q

What is the stamp duty land tax?

A

Chargeable on land transactions. Payable by purchaser. Applicable Rate x Consideration. Calculated on VAT inclusive price. Different rate on non-residential property.

32
Q

How does SDLT work with a lease?

A

Payable on total premium and NPV of rent payable over the term. Do both separately.

33
Q

How long prior to registration can you recover VAT? And what on? What are the conditions?

A

6 months for services, 4 years for goods that were supplied for business use and are still on hand at registration.

34
Q

Can you reclaim VAT on the entertaining of suppliers?

A

No.

35
Q

If you enter a lease for 10 years with annual rent of £20k and a lease premium of £29k, what amount do you charge SDLT on?

A

£200kbands + 29k0% (as it’s within 0% threshold)

36
Q

If a trader fails both test 1 and 2 what do they need to do?

A

Pay all the exempt input VAT recovered back to HMRC.

37
Q

What SDLT rates do you use for lease premium?

A

0, 2, 5.

38
Q

What SDLT rates do you use for the NPV of the lease?

A

0, 1, 2.

39
Q

When the partial exemption fraction is 90%, how much input tax can be claimed?

A

90%

40
Q

When calculating SDLT do you include or exclude VAT?

A

INCLUDE

41
Q

Do you add the additional home SDLT rates onto the base rates or just use them?

A

Just use them.

42
Q

When is stamp tax due on an electronic share purchase?

A

Payable on the 7th day of the month following the month of agreement for a paperless transaction. However, if the transfer can be made by CREST it should be paid over by 14calendar days after the trade date.

43
Q

What is the maximum house price that qualifies for first time buyer relief?

A

£500,000

44
Q

Do you need to round the % when calculating taxable/exempt overheads for VAT?

A

???

TC (6 decks)

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