VAT Flashcards
How to find the VAT amount on a VAT inclusive figure?
x 20/120 (1/6). For VAT exclusive would be 20% as usual
Supplies made where are outside the scope to VAT?
made outside the UK
what is the tax point?
time at which a supply of good is treated as taking place
VAT cannot be recovered on?
goods and services used for private use. if partly for business and partly private, VAT is apportioned.
what can VAT not be deducted from?
motor cars and most bsuienss entertainment
what does it mean if something is zero rates?
it is still a taxable supply but just zero rates. Input tax is reclaimed in the same way.
What does it mean if a supply is exempt?
No VAT is charged but also related input VAT is not recoverable
when does someone need to register for VAT?
taxable turnover in the previous 12 months exceeds 85k OR there are reasonable grounds for believe supplies in next 30 days will exceed the threshold (HMRC can exempt a person from registration if they only make zero rated supplies)
who can also register for VAT?
can voluntarily register or can register as an ‘intending’ trader if intend to do over threshold etc
How long are VAT periods?
normally 3 months but can also be 1 month if input tax is likely to exceed output tax on a regular basis
When must VAT be submitted?
no later than 1 month and 7 days after the end of the VAT period. Must be filed and paid online under MTD
Businesses with no establishment in the UK?
the threshold does not apply-must register if they make any taxable supplies
Why may businesses register voluntarily?
credibility, to recover input vat, to avoid late registration penalties
disadvantages to registering for VAT?
Output tax will be charged, VAT accounting (VAT returns are an administrative burden)
why would intending traders register?
to allow them to recover VAT from HMRC whilst the business is being set up
what constitutes being a ‘business’ for VAT purposes?
supply is made for the purposes of obtaining income (e.g not just as a hobby)
when must HMRC be notified if VAT threshold has been exceeded?
within 30 days from the end of the month in which the limit is breached-will then charge VAT from start of the next month
Under future test when does VAT apply from?
Must start charging it straight away (it is intended to catch substantial orders)
What is common misconception about the future test?
It will only apply if the sales in the next 30 days ALONE will exceed 85k
When must a business compulsory deregister from VAT?
sale of business, changing status, ceasing to make taxable supplies (notify hmrc within 30 days)
