VAT Flashcards
What is the basis of the charge to VAT?
Any supply made in the UK of goods or services by a taxable person in the course or furtherance of any business in return for consideration.
When and how must a person register for VAT?
Person must be registered:
at the end of any month if the value of the taxable supplies in the period of 1 year or less exceeds the VAT registration threshold (£85,000).
OR
at any time, if reasonable grounds for believing value of taxable supplies in period of 30 days will exceed £85,000.
Must notify HMRC within 30 days of the end of that month and register from beginning of the month coming.
When can registration for VAT be cancelled?
Value of future annual taxable supplies will not exceed £83,000.
What is input and output VAT? How do they relate to each other?
Input: charged by seller when taxable person buys in supplies (e.g ingredients, materials)
Output: charged when business supplies goods or services to customers (e.g final product sold).
VAT registered business can offset input tax against output tax and account to HMRC for the difference.
What are the different rates of VAT?
Standard (20%): charged on goods and services, deemed VAT inclusive price unless otherwise stated.
Reduced (5%): domestic heating and power, mobility aids for elderly, children’s car seats.
Zero-Rated: Food, sewerage and water, books, new residential houses, public transport. Still taxable.
Exempt: No VAT payable, cannot offset input tax against this. Insurance, finance, education, sale of land and buildings.
What are the VAT record-keeping requirements?
Where a standard (20%) or reduced rate (5%) supply to another taxable business, must supply customer with a VAT invoice within 30 days of supply and keep a copy.
What is a VAT return?
To HMRC, output tax charged less input tax paid. Submit online every 3 months. Payment usually due 1 month and 7 days after end of VAT period.
