VAT Flashcards
Disco Ltd intends to register voluntarily for VAT.
Identify which of the following statements is correct.
a) Disco Ltd must be expecting to be in a repayment position.
b) Disco Ltd must not be making any exempt supplies.
c) Disco Ltd must be making or intending to make some taxable supplies.
d) Disco Ltd must be expecting to exceed the VAT threshold within the next 12 months.
c)
The alternative answers are incorrect because:
The company can register if it makes a mixture of taxable and exempt supplies.
It is advantageous to register if expecting to be in a repayment position but it is not required.
The company does not have to be expecting to exceed the VAT threshold.
Parminder runs two separate businesses. The first business is a clothes repair service which has taxable supplies of £35,000 per annum. The second business is a carwash service which has taxable supplies of £245,000 per annum. Both businesses are run by Parminder as a sole trader.
Select which of the following options correctly identifies which of the businesses is relevant in determining whether Parminder should register for VAT.
a) Both businesses.
b) The clothes repair service.
c) The car-wash service.
d) Neither business.
a)
A ‘person’ for VAT purposes includes an individual sole trader, partnership, limited company, club, association or charity. A person’s registration covers all of his business activities, however diverse. It is the ‘person’ who is registered, not the business.
Therefore, Parminder will register as a sole trader with two businesses and will have to charge VAT to the customers of both businesses.
Clementine orders some goods from Forty-Niner plc on 1 May. They are despatched on 8 May. On 4 June Clementine receives the respective invoice dated 2 June. Her payment arrives at the company on 7 June. Forty-Niner plc does not operate the cash accounting scheme.
Select which one of the following options correctly identifies the tax point for the transaction.
a) 1 May
b) 8 May
c) 2 June
d) 7 June
b
The time the goods are made available - invoice not issued within 14 days.
Step Ltd submitted its VAT return for the quarter ended 30 September 2021 on 14 November 2021.
It paid the VAT due of £12,000 on 31 October 2021. Step Ltd had submitted and paid its VAT for the
previous two quarters one month late in each case, but had made all previous returns and payments
on time.
What is the default surcharge that arises in respect of the quarter ended 30 September
2021?
A £0
B £240
C £600
D £1,200
A £0.
The VAT return is late but the payment is not so there is no default surcharge
Claire owns a shop. She gave a coat that she had bought as stock for £120 to her sister as a gift. She would have sold it for £200.
What is the value of the coat for VAT purposes?
£100
VAT exclusive price payable by the person supplying the asset to purchase a replacement
Darren, a trader who does not use the cash accounting scheme, supplies some goods on sale or return. The goods are removed on 27 March. The goods are adopted by the customer on 2 April. An invoice is issued on 12 April and payment is received on 14 April.
When is the actual tax point?
27 March
2 April
12 April
14 April
12 April.
Basic tax point is the date the goods are adopted (2 April), but the invoice is within 14 days so actual tax point is invoice date (12 April).
Donatella ordered goods on 1 February. The goods are despatched on 8 February. On 4 March Donatella receives the invoice for the goods and her payment is received by the supplier on 7 March.
Select which one of the following options correctly identifies the tax point for the transaction.
1 February
8 February
4 March
7 March
8 February, the date on which the goods are made available, and the invoice is not issued within 14 days nor is the invoice or payment before the basic tax point.
Stefan is provided with a company car by his employer. It has a list price of £17,000 and CO2 emissions of 178g/km. The relevant VAT inclusive fuel scale rate is £433 per quarter. Stefan’s employer reimburses his business petrol and his personal petrol.
The correct output VAT charge per quarter in relation to the reimbursement of fuel is £
Enter your answer in pounds to the nearest penny without the £ sign.
The correct answer is: £72.17.
433 × (20/120)
Faradon Ltd is registered for VAT. The company purchased a motor car for £20,540 including VAT and £180 for the road fund licence (car tax). The manufacturer of the car had published a list price for the car of £22,400.
Select which one of the following options correctly identifies the amount which should be included in the capital allowance computation as the acquisition cost of the vehicle.
£17,117
£20,360
£20,540
£22,400
£20,360.
The VAT inclusive price is used as input VAT on cars is irrecoverable if there is any non-business use. The road fund licence is not a capital cost so is excluded. (20,540 - 180 = 20,360).
When is a VAT return due under the annual accounting scheme?
How is VAT paid under the scheme?
Within two months of the end of the year
9 monthly payments OR 3 Quarterly payments. Both throughout the year with one balancing payment after the year end
