VAT

Question 1

what are single supplies?

Answer 1

a supply with one VAT liability. there may be ancillary elements to the supply but ultimately the supply is charged at one VAT rate

Question 2

what are multiple supplies?

Answer 2

occurs where different elements of the supply are separate and clearly identifiable but have been invoiced together at an inclusive price for both items. the VAT will be accounted for separately on the different elements

Question 3

main advantages of VAT groups

Answer 3

• no VAT is charged on intra-group supplies
• input tax can be recovered for a wholly exempt entity if they meet the de minimis rules

Question 4

main disadvantages for VAT groups

Answer 4

• all entities in the group are jointly liable for VAT
• bringing in an exempt or partially exempt may lead to a restriction of input tax

Question 5

when can input VAT be recovered in full?

Answer 5

• if the VAT relating to exempt supplies does not exceed the de minimis limits

Question 6

what is test one?

Answer 6

total input tax incurred is no more than £625 per month on average and the value of exempt supplies is no more than 50% of the value of all supplies

Question 7

what is test two?

Answer 7

total input tax incurred less input tax directly attributable to taxable supplies is no more than £625 per month on average and the value of exempt supplies is no more than 50% of the value of all supplies

Question 8

can residential buildings be taxed?

Answer 8

there is no option to tax residential buildings and they are exempt supplies

Question 9

can commercial buildings be taxed?

Answer 9

construction of commercial buildings, sale of <3 year old buildings, and work on existing commercial buildings are taxed

Question 10

what is the option to tax?

Answer 10

• owners of land and buildings can opt to charge VAT on supplies but all future supplies will be taxed as well.

Question 11

is creating a VAT group automatic?

Answer 11

no, it must be elected for