Module 13: Further Aspects of VAT Flashcards
Calculating input tax recoverable - Step 1
Directly attribute input tax to taxable and exempt supplies as far as possible
Calculating input tax recoverable - Step 2
Calculate VAT recovery percentage
Calculating input tax recoverable - step 3
Use the percentage to apportion unattributable input tax to taxable and exempt supplies
Calculating input tax recoverable - step 4
Check whether the irrecoverable input tax is de minimis
Calculating input tax recoverable - step 5
Calculate the total recoverable input tax
VAT recovery percentage
Taxable supplies / total supplies
Rounded up to the nearest %
De minimis limit
If the input tax attributed to exempt supplies is:
- < £625 per month on average (£1875 per quarter and £7500 per year)
AND
- < half the total input tax in the period
If input tax attributable to exempt supplies is within de minimis limit
Can be recovered
Changes to partial exemption calculations - use PY %
Can base calculations on PY overall recovery percentage
Changes to partial exemption calculations - timing of adjustment
Can make annual adjustment in final VAT return of VAT year instead of first VAT return after end of VAT year
Supply of land or buildings
Exempt
Sale of new (< 3 year) commercial building
Exception
20% standard rated
Sale of brand new residence
Exception
Zero rated
Services for qualifying conversion of residential property
Exception
5% reduced rate
Opting to tax
Makes an exempt supply a standard rated supply
Option to tax can be on a
Property by property basis
Option to tax is
Fundamentally irrevocable - apart from in first 6 months or after 20 years
Group registration - supplies between group members
Ignored for VAT purposes
Group registration - input tax
Input tax incurred by group companies is attributed to the group’s use of the input in making supplies to third parties, not the individual company’s use
Advantage of grouping (4)
- simpler the prepare one VAT return
- supplies between group members are ignored
- can include small wholly exempt company and recover de minimis
- greater central control of tax affairs
Disadvantages of grouping (5)
- difficult to collect all info needed
- can be advantages to charging VAT on intra-group supplies
- every company in group is jointly liable
- group may be more likely to exceed £2.3m POA threshold
- higher default surcharges
