VAT Flashcards
What is VAT?
Indirect tax
Charged on:
a taxable supply
by a taxable person
in the uk
in the course or furtherance of business
What is output tax?
Charge on sales
What is input tax?
incurred on purchases and expenses
What are the rules of compulsary registration?
Once annual turnover exceeds £85,000.00
What is the historical test?
Test at end of every month looking back over previous 12 months
Notify HMRC within 30 days of month ended where turnover exceeds
Registered from the first day of the second month after the taxable supplies exceeded threshold
What is voluntary registration and its + and - ?
+
Input tax recoverable
Avoids penalties
Gives impression of larger business
-
Output tax on sales
May affect competitivesness
VAT admin burden
Customers get 20% increase in price but the business doesn’t see increase
What is deregistration?
Compulsory:
When cease making taxable supplies
Inform HMRC within 30 days of ceasing
Deregister from date of cessation
Voluntary:
Expected value of taxable supllies less than or equal to £83,000.00
Inform HMRC at anytime
Gergister from date or request or agreed later date
What are VAT Groups?
Companies under common control can register for group VAT registration
Effects:
One VAT return
Representative member responsibility
All members liable
No VAT on supplies between group
What is transfer of going concern?
Not a taxable supply
Conditions:
Business transferred as going concern
No significant break in trading
Transferee VAT registration or will become so immediatly after transfer
Same type of trade carried on after transfer
Transferee can take over VAT registration
but inherits liabilities
What is output VAT?
Discounts
Goods for own use
Gifts
Private Fuel
What is input VAT?
Irrecoverable input VAT
Business entertaining
Relief for impairment loss
VAT Tax point?
Date supply pccurs for VAT purposes
Starting point is basic tax point for when goods are recieved or services performed
