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PTX > VAT > Flashcards

VAT Flashcards

1
Q

Which items cannot be reclaimed for input VAT ?
(4)

A

Client entertaining (unless overseas clients)
Cars
Non-business items
Items where no receipt is held

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2
Q

Can you register if you make only exempt supplies?

A

No

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3
Q

What is a BTP?

A

The date goods have left inventory
The date services have been completed

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4
Q

If no tax invoice has been issued or no payment has been received, what is the Tax Point?

A

Has invoice been issued within 14 days after BTP?
Yes > ATP is invoice date
No > BTP

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5
Q

Under the historic turnover test, when should HMRC be notified of registration and when should VAT be charged from?

A

Notification: Within 30 days
Effective charging: from first day after end of month in which limit exceeded

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6
Q

Under the future turnover test, when should HMRC be notified of registration and when should VAT be charged from?

A

Notification: By end of the 30 day period
Effective: Immediately

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7
Q

When should a trader notify HMRC if they cease to trade?

Compulsory VAT deregistration

A

Within 30 days, from date of cessation

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8
Q

What items is output VAT charged on? (6)

A
  1. Standard rate
  2. Reduced rate
  3. Discounted sales
  4. Goods taken for own use
  5. Gift of goods
  6. Private fuel for employees
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9
Q

How should you charge output VAT on discounted sales?

A

Charge full amount of VAT on undiscounted price,
Issue credit note if prompt payment discount is taken

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10
Q

How should you charge output VAT on goods taken for own use?

A

VAT is charged on full replacement cost of supplies

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11
Q

How should you charge output VAT on Gifts?

A

VAT charged for gift of stock / fixed asset at replacement value
Gift of supplies are NOT taxable

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12
Q

How should you charge output VAT on private fuel for employees?

A

VAT is charged at a scale rate (given)

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13
Q

Can input VAT on Bad Debts be recovered?

A

Yes

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14
Q

How should traders with a VAT liability > £2.3m pa pay their VAT?

Substantial traders

A

POA [of each quarter]
1st POA: end of month 2
2nd POA: end of month 3
Balancing: end of month 4

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15
Q

How is the VAT liability POA calculated?

A

POA = 1/24 of annual liability in previous year

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16
Q

What is the ‘Cash Accounting Scheme’ ?

A

VAT is accounted on cash basis instead of a tax point basis.

17
Q

What are the limits under the Cash Accounting Scheme?

A
  1. Taxable supplies (zero / reduced) < £1.35m in the following (next) year
  2. Taxable supplies > £1.6m in the previous 12 months, trader must leave the scheme
18
Q

What is the ‘Annual Accounting Scheme’ ?

A

1 VAT return submitted each year within 2 months of PE

19
Q

What are the options of VAT payments under the Annual Accounting Scheme?

A
  1. 9 payments: months 4 - 12, balancing payment with submission of return.
  2. 3 payments: months 4, 7, 10 of the VAT year, balancing payment with submission of return.
20
Q

Look out for … to identify payment dates:

Annual accounting scheme

A
  1. monthly or quarterly payments?
  2. VAT YE
21
Q

What is the ‘Flat Rate Scheme’ ?

A

Net VAT due = flat rate % x Gross turnover (VAT inclusive)
No separate input VAT recovery

22
Q

What is the criteria to claim input VAT on items before registration?

A
  1. The items are still in inventory / still in use
  2. Purchased within 6 years
23
Q

When are the VAT returns and payments due?

A

1 month and 7 days after end of quarter

24
Q

If there is an error and output VAT has not been charged, who is liable to pay and on what price is VAT calculated?

A
  1. Trader is responsible to pay
  2. Selling price (incl VAT)
25
Q

Are these items taxable?
1. Gift of services
2. Gift of goods
3. Personal use of goods owned by business owner
4. Services supplied to business owner

A
  1. Not taxable
  2. Taxable
  3. Taxable
  4. Taxable
26
Q

A registered VAT company buys a car which includes ‘ vehicle excise duty’ (incl VAT).
What is the capital allowance for the acquisition cost?

A

capital allowance = Vehicle cost - excise duties

27
Q

If a sole trader has 2 businesses, both has taxable supplies but only 1 exceeds the threshold.
Are both businesses relevant in registering for VAT?

A

Yes, the sole trader is the taxable person and would have 1 registration for both businesses.

28
Q

Are zero-rated supplies eligible for output VAT?

A

Yes, they are just charged at 0%

29
Q

What happens to your deemed supply of trade stock and capital items once you reach the de-registration limit?

A

On deregistration, there is deemed supplies previously recovered. Output VAT is payable on this supply > £1,000

30
Q

What are the restrictions on, for example a computer provided to an employee for 10% personal use?

A

There is no personal use restrictions as it is a valid expense of the business

31
Q

What is the cost to the company of a car for capital allowance purposes?

A

Input VAT is not recoverable on cars and accessories unless the car is used for 100% business

32
Q

I sell clothes, I gave a coat that I brought for £120 to Alex. The selling price of this coat is £200 (incl VAT).
What is the value of the coat for VAT purposes?

A

Cost x 100/120

33
Q

I dispatch goods sold on 20 Feb, on this day I receive 10% deposit (incl VAT).

Invoice for full amount issued on the 1 Mar. The balancing payment was received on the 10th Apr.

How much VAT must be accounted for, for:
1. Quarter to 29 Feb
2. Quarter to 31 May

A
  1. Tax point 1: 20th Feb = deposit x 1/6
  2. Tax point 2: 1st Mar = balancing payment x 1/6
34
Q

What happens if there are errors on a VAT return?
Taxpayer

A

A taxpayer can adjust on the next VAT return if below limit of:
Greater of £10,000 or 1% of turnover (max £50,000)

35
Q

What is the period for ‘Repayment of interest on overpaid tax’

A

From later of actual date paid or due date to day before repayment

36
Q

What is the time limit for keeping VAT records?

A

6 years

37
Q

What are the responsibilities of a newly registered trader? (4)

A
  1. Charge output tax on taxable supplies
  2. Quote VAT reg number on all sales invoices
  3. File a return every quarter
  4. Maintain appropriate VAT records
38
Q

Does a gift of inventory or fixed asset that replacement’s cost less than £50 to a single person qualify for VAT?

A

NO

PTX (4 decks)

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