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PTX > VAT > Flashcards

VAT Flashcards

1
Q

Scope of VAT

A

Chargeable on
The sale of taxable supplies
By a taxable person

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2
Q

VAT: Taxable supply

A

Any supply
Of goods or services
Made in UK

Other than
Exempt supply
Or a supply outside VAT scope

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3
Q

VAT: Taxable person

A

A sole trader
Partnership
Limited company
Club
Or association

Making taxable supplies

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4
Q

VAT: Reduced rate

A

5%

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5
Q

Amount trader receives on selling a product when an error means output VAT not being charged on a taxable supply

A

Considered to be inclusive of VAT

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6
Q

No. VAT registrations for a sole trader carrying on several business

A

One

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7
Q

No. VAT registrations for multiple limited companies

A

Multiple

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8
Q

2 years for compulsory VAT registration

A

Historic

Future prospects

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9
Q

What are both compulsory VAT registration tests based on?

A

Turnover

Compared to annual registration limit

(Historic Test also considers deregistration limit)

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10
Q

VAT annual registration limit

A

85k

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11
Q

VAT deregistration limit

A

83k

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12
Q

VAT: Historic test: Frequency

A

End of each month

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13
Q

VAT: Historic test: what is the test?

A

Looks back 12m
To see if total taxable supplies exceeded registration limit

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14
Q

VAT: Historic test: notification

A

Within 30d
Of end of month exceeded

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15
Q

VAT: Historic test: effective from

A

First day after end of month following relevant month

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16
Q

VAT: Historic test: Does trader need to register if taxable supplies for next 12m expected to be less than deregistration limit?

A

No

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17
Q

VAT: Historic test: Does trader need to register if only makes zero-rates supplies

A

No

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18
Q

VAT: Future prospects test: Frequency

A

Considered constantly

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19
Q

VAT: Future prospects test: What is the test

A

Looks forward
Sees if in the next 30d alone
Taxable supplies will exceed registration limit

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20
Q

VAT: Future prospects test: Notification

A

By end of 30d period
Starting on date reader became aware

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21
Q

VAT: Future prospects test: Effective from

A

Immediately
(I.e. start of 30d period)

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22
Q

VAT: Future prospects test: Does trader need to register if only making zero rated supplies?

A

No

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23
Q

VAT: Taxable supplies

A

All sales

Excluding:
VAT
Exempt supplies
Outside scope supplies
Sale of capital assets

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24
Q

Responsibilities of VAT registered person

A
  1. Charge output tax
  2. Quote VAT no. on all sales invoices
  3. File return for allocated ‘tax period’
  4. Maintain appropriate records
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25
Q

What to do if trader registers late for VAT?
So doesn’t charge output VAT on taxable supplies

A

Pay outstanding VAT to HMRC
(Sales treated as VAT inclusive)

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26
Q

When can someone register for VAT voluntarily

A

Business making
Or intending to make
Taxable supplies

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27
Q

Voluntary VAT registration: Advantages

A

Avoids penalties for late registration

Can recover input tax
(On purchases)

Can disguise small size of business

28
Q

Voluntary VAT registration: Disadvantages

A

Burden if compliance

Must charge output VAT
(Makes produce more expensive to consumers who can’t claim back e.g. consumers)

29
Q

VAT deregistration: Compulsory: when?

A

Business ceases to make taxable supplies

30
Q

VAT deregistration: Compulsory: Notify HMRC by when

A

Within 30d
(From becoming aware)

31
Q

VAT deregistration: Compulsory: Effective from

A

Date taxable supplies cease

32
Q

VAT deregistration: Voluntary: When?

A

Evidence taxable supplies will not exceed deregistration limit in next 12m

33
Q

VAT deregistration: Voluntary: 12m measured from when

A

Starting any time

34
Q

VAT deregistration: Voluntary: Effective from

A

Date of request
Or agreed later date

35
Q

VAT: Effect of deregistration

A

Output tax accounted for
On the value of fixed assets
And inventory
Held at the date of deregistration
On which a deduction for input tax had been claimed

36
Q

VAT deregistration exception

A

Final tax liability waived
If less than or equal to
1k

37
Q

VAT normally accounted for how frequently?

A

Quarterly

38
Q

VAT tax point

A

Date of a supply
To indenting quarter in which it falls

39
Q

VAT: BPT

A

Basic tax point

40
Q

BTP: Goods

A

Date removed from stock
Or despatched

41
Q

BTP: Services

A

Date performed

42
Q

BTP: Goods on sale or return

A

Earlier of
Date goods adopted by customer
Or 12m after despatch date

43
Q

VAT: ATP

A

Actual tax point

44
Q

ATP process: Step 1

A

Identify BTP

45
Q

ATP process: Step 2 after identifying BTP

A

On or before BTP, has:

A tax invoice been issued?
A payment been received?

46
Q

ATP process: Step 2 (invoice or payment made): Yes:

A

ATP is the earlier date

47
Q

ATP process: Step 2: No

A

Step 3:

Has the tax invoice been issued
Within 14d
Of the BTP?

48
Q

ATP process: Step 3
(Has tax invoice been issued within 14 days of BTP?)

Yes

A

ATP = Invoice date

49
Q

ATP process: Step 3
(Has tax invoice been issued within 14 days of BTP?)

No

A

ATP = BTP

50
Q

VAT tax points: Deposits

A

Creates its own tax point

Will be separate tax points for
The deposit
The balancing payment

51
Q

VAT: Trader withdraws goods for own use

A

Output VAT accounted for
On full replacement cost of supplies

52
Q

VAT: Gifts of stock or fixed assets

A

Treated as taxable supplies
At replacement value

Unless:
Cost of total gifts
Made by the same person
Don’t exceed £50
(Excluding VAT)
In any 12m period

53
Q

VAT: Are trade samples taxable supplies?

A

No

54
Q

VAT: Are gifts of services taxable supplies?

A

No

55
Q

VAT: Discounts

A

VAT on discounted price

(Because always calculated on price customer actually pays)

56
Q

VAT: Prompt payment/settlement discounts

A

2 choices:

  1. Supplier charges full VAT
    Then credit note
  2. Supplier details both prices on invoice
    And notes customer can only recover input VAT on amount actually paid
    If discount it taken then supplier must adjust their records
57
Q

VAT: Private fuel for employees
(Both business and private purposes)

Input VAT

A

Can recover all input VAT

58
Q

VAT: Private fuel for employees
(Both business and private purposes)

Output VAT

A

Charged at a scale rate
Based on
CO2 Rating of car
(Compensates for VAT reclaimed on fuel used privately)

(Multiply scale rate by 1/6 to obtain outfit VAT that will be included on trader’s VAT return)

59
Q

VAT: Bad debts

A

Can reclaim output VAT if:

Debt is at least 6m overdue
And
Debt has been written off in seller’s books

60
Q

VAT: Recovery of pre-registration VAT: Goods

A

Must be acquired for business purposes
And should not be sold or consumed prior to registration
(I.e. should still be in stock)

Acquired less than 4m before registration

61
Q

VAT: Recovery of pre-registration VAT: Services

A

Must be supplied for business purposes

Supplied less than 6m before registration

62
Q

Can input VAT be recovered for cars

A

No

Unless 100% for business purposes
E.g. cars for driving school

63
Q

Can input VAT be recovered for non-business items

A

No

64
Q

Can input VAT be recovered for VAT items for which no VAT receipt is held

A

No

65
Q

Can input VAT be recovered for business entertaining

A

No

66
Q

Can input VAT be recovered for business entertaining: Exceptions

A
  1. Staff entertaining
  2. Entertaining foreign customers

PTX (14 decks)

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