Tax Processes - Chapter 1 - Communication within VAT and payroll Flashcards
When is the latest a VAT return can be submitted to HMRC?
1 month and 7 days after the end of the VAT quarter
What are the exceptions to the window in which you make payment to HMRC?
- Annual Accounting Scheme
- Monthly VAT returns and payments
- Payment on account arrangements
If a direct debit is setup with HMRC when will payment be made.
3 days after the last submission date, 1 month and 10 days after VAT quarter end
What errors on the VAT return do you not need to disclose?
- Less than £10,000
- Between £10,000 and £50,000 (and less 1% of box 6)
- Not deliberate
What types of errors on the VAT return must you disclose?
- Between £10,000 and £50,000 (greater than 1% of box 6)
- Greater than £50,000
- Error made on purpose
If you do not make VAT payments by the due date what will you be put into?
Default
When will you be put into default?
- If HMRC has not received your VAT return even if you are owed money by HMRC
- Full payment from the return has not been received to HMRC
When will you be put into default?
- If you do not submit your VAT return even if HMRC owes you money
- If the balance is not paid by due date in full
When is the due date for POA’s?
Last day of second and third month of every accounting period.
What will you be sent if you default?
Either a Surcharge liability notice or a Surcharge liability notice extension
When is the surcharge period?
It begins on the date of the notice and ends 12 months from the end of the latest period in default
What happens if you default during a surcharge period?
If this happens with VAT outstanding for that period, a default surcharge will be charged and an extension notice will be sent. You have a surcharge assessment if a surcharge is due
What arrangements are there for small business with surcharges?
If your taxable turnover is less than £150,000 the first time help will be sent to fix any issues with paying on time, if you default again within 12 months a Surcharge Liability Notice will be sent
How is the surcharge calculated?
First time it will be 2% of outstanding VAT at the due date and it grows to 5%, 10% and 15% for further defaults
How is surcharge calculated on POA?
Any late payments on either POA or balance due will be totalled and surcharge calculated on that
What’s the minimum surcharge on 10% to 15%?
£30
What happens on surcharge 2% and 5% if it’s below £400?
- A surcharge is not issued
- A surcharge Liability Extension notice is issued
- Rate of surcharge is increased if you default again within surcharge window
Why is it important to pay as much VAT as you can by the due date?
Surcharge is calculated on VAT not paid by due date
Is there liability to surcharge if you pay the VAT due on time but your return is late?
No but you will receive a Surcharge Liability Extension Notice
What is meant by a reasonable excuse?
Something which stopped you reaching a tax obligation which you took reasonable care to meet
What can you do if you disagree with a surcharge?
- Ask your case to be reviewed
- Have your case heard by an independent tax tribunal
Why might someone ask to review a default?
- Believe your excuse is reasonable
- Wrong surcharge rate applied
- Wrong VAT used to calculate surcharge
- Exceptional circumstance arose
How could HMRC communicate a VAT rate change?
- Letter
- TV or radio
- HMRC website
- Social Media
What changes do businesses have to notify HMRC about?
- Turnover
- Main business activity
- Membership of a VAT group
Notification must be within 30 days
How much notice should HMRC get for bank details changing?
14 days
What is the penalty if a paper VAT return is submitted without prior agreement with HMRC?
£400
What will HMRC issue if a VAT return isn’t submitted on time?
VAT notice of assessment of tax
What happens if a HMRC assessment is too low and it is not reported within 30 days?
30% penalty can be charged
