Topic 7 - Further aspects of VAT and the administration of VAT Flashcards
What are the usual VAT return periods?
Usually quarterly, but businesses may choose monthly if due repayment or annual for small businesses.
What is the purpose of Form VAT100? NOT IN TAX TABLES
To file VAT returns online, with the return and payment due 7 calendar days after the last day of the month following the end of the return period.
From when did Making Tax Digital for Business (MTDfB) apply to all VAT-registered businesses?
From April 2022.
What are the key requirements under MTDfB for VAT? 2
1) Keep records digitally for 6 years. 2) Provide VAT return information via MTDfB compatible software.
How is VAT payable/repayable calculated?
Output VAT minus Input VAT.
What is Output VAT?
The VAT charged on sales.
What is Input VAT?
The VAT paid on purchases that can be reclaimed.
Which of the following statements about VAT periods is correct?
A) VAT returns are always quarterly.
B) VAT returns can be filed monthly or annually for small businesses.
C) VAT100 must be submitted in paper format.
D) VAT payments are due 30 days after the period ends.
B) VAT returns can be filed monthly or annually for small businesses.
What is the deadline for submitting VAT returns and payments? IN TAX TABLES
7 calendar days after the last day of the month following the end of the return period.
Who are required to make VAT payments on account? NOT IN TAX TABLES
Substantial traders with a VAT liability greater than £2.3 million per year.
How are VAT payments on account calculated? NOT IN TAX TABLES
1/24 of the previous year’s total VAT liability is paid at the end of the second and third months in each quarter.
When is the balancing payment due for VAT payments on account? NOT IN TAX TABLES
At the end of the month following the end of the quarter, along with the VAT return.
How must VAT payments on account be made?
They must be paid electronically.
Which of the following statements about VAT payments on account is correct?
A) They are required for all businesses.
B) They apply to traders with VAT liability over £2.3m per year.
C) Payments are made at the end of every month.
D) The balancing payment is made at the start of the next quarter.
B) They apply to traders with VAT liability over £2.3m per year.
What are the main VAT records that must be kept? 7
- Order and delivery notes
- Purchase invoices, copy sales invoices and credit notes
- Purchase and sales day books
- Records of daily takings (eg, till rolls)
- Cash book
- Bank statements and paying-in slips
- Annual accounts (P&L account and Balance Sheet)
How long must VAT records be kept?
6 years.
What details must a VAT invoice contain? 4
1) The tax point date. 2) VAT registration number. 3) A description of the goods or services. 4) The total VAT chargeable.
When is a simplified VAT invoice allowed?
For supplies under £250. e.g. Tesco reciept
What type of VAT invoice can retailers issue for supplies over £250?
A ‘modified’ invoice (and simplified invoices for supplies under £250). Modified will separate VAT and non VAT amounts.
Which of the following is NOT a required VAT record?
A) Sales invoices.
B) Order and delivery notes.
C) Annual accounts.
D) Employee payroll records.
D) Employee payroll records.
Which of the following statements about VAT invoices is correct?
A) All invoices must have the same level of detail.
B) A simplified invoice is only allowed for supplies over £250.
C) The tax point date is required on a VAT invoice.
D) Retailers cannot issue modified invoices.
C) The tax point date is required on a VAT invoice.
What are the 3 schemes in which small business can claim VAT relief?
- 1 Annual Accounting Scheme
- 2 Cash Accounting Scheme
- 3 Flat Rate Scheme
What is the Annual Accounting Scheme for VAT?
A scheme where businesses submit one VAT return per year and make electronic payments on account (monthly or quarterly).
How does the nine monthly interim payments system work under the Annual Accounting Scheme?
Nine payments x 1/10 x estimated VAT liability at the end of months 4-12, with a balancing payment and VAT return due within 2 months after year-end.