Value Added Tax Flashcards
Who administers vat and what is the charge
Hmrc administers it and the charge is as follows
On the val of supplies of taxable goods and services made in the uk and when acquisitions are made from business in the eu
Payable when goods are imported to uk from outside the eu
Services are treated as being=g done in the country where the customer is located
What are the 2 main rates of vat
Standard 20%
And 0%
When vat is charged at a reduced rate what is this rate and on what products
Rate is 5%
Contraceptive products
Installations of energy saving materials
Certain property renovation
Domestic fuel
What kind of supply is exempt from vat
Banking and insurance
Can input tax be deducted and if so how is it paid
Yes it can, it’s deducted from output tax and the excess of out put tax is paid to hmrc. Or if there is an excess of input tax, it is then claimed back from hmrc
What threshold must traders and business register for vat
They do so when the value of taxable in previous 12 months is mother than 85k
When must a trader notify hmrc of going over the threshold
Must do it within 30 days of the end of the month in which the limit was exceeded
So if limit was passed in may
Notification by 30 June
Vat registered on 1 July
Can tax be claimed back on exempt supplies
No they can’t
Can small businesses reclaim input vat even on exempt supplies
Yes they can as long as it does not exceed 7,500 per year and not exceed more than half of total input vat
Name some exempt supplies
Insurance Finance Health and education Burial and cremation Leases and sales of commercial landd and buildings that are more than 3 yrs old
What is the flat rate scheme
It’s an optional scheme to help reduce the cost of complying with vat obligations by simplifying the way the]at small business calc tax
How is the flate rate scheme calculated
They pay a fixed percentage of its taxable turnover to hmrc
The rate is set according to the avg percentage of gross sales and this rate is different for different trade sectors
What is the new flat rate for limited cost traders
16.5%
What is a limited cost trader
One that has expenditure of goods that is less than 2% of vat inclusive of turnover or greater than 2% of vat inclusive turnover but less than 1,000 per annum
What is the max taxable income a company can make to get a flat rate scheme
And once in it what does it change to
150k
Changes to 230k
