VAT Flashcards
When is the tax point date?
Default date = basic tax point date = deliver date.
The invoice date overrules the TP date if the invoice date is within 14 days of the basic TP date (normally will)
The payment date overrules the TPD if the payment occurs before basic TP (deliver) (this is uncommon)
What are the VAT consequences when the employer pays for an employee’s petrol
Input tax is paid on the employee’s receipts.
Output tax is reclaimed at specified rates per the ‘VAT road fuel scale charge’ in the supplementary materials.
If the output reclaimable (per table) exceeds the input (per the receipt), the employer should pay for fuel.
How do we reclaim VAT on bad debts where we will not receive the output tax?
We can only claim this 6 months after the payment date.
Initially, we would’ve included the sale in output tax on the invoice/TP date. 6 months later, we can then count the amount as input tax.
When does a company/trader need to become VAT registered?
Earliest of:
a) taxable supplies in the last 12 months exceeding £85,000
b) taxable supplies in the next 30 days ALONE likely to exceed £85,000
How do monthly VAT payments on account work?
You pay (last year's VAT liability/24) in the first 2 months, then a quarter-balancing payment in month 3. Then do this again 4 more times during the year.
How does the default surcharge regime work (VAT)
period runs for 12 months.
You get a warning, then 2%, then 5%, then 10%, then 15%.
Every time you are late, the default surcharge period will end 12 months after that date.
Explain the annual accounting scheme (VAT)
Note only available if income < £1.35m.
Rather than making quarterly submissions and payments; you make one annual submission and monthly payments.
Note: monthly payments = months 4-12, with a balancing payment in month 12
What is the de minimis test, for VAT?
Default rule = T/T+E
De minimis limit gives relief for very small amounts of irrecoverable VAT.
If a business can reclaim irrecoverable VAT if their irrecoverable VAT is both:
a) less than £625 per month
b) <50% of total input VAT
What are the VAT implications on:
a) New residential properties
b) existing residential properties, and
c) rent of a residential property
Buying new residential = standard rated
Buying existing residential prop. = exempt
Renting residential property = exempt
VAT implications on commercial property (new, old, rent, work on)?
Buying new (<3 years) commercial = standard rated Work on (improvement, etc.) = standard rated Buying old (> 3 years) commercial = exempt rent of commercial property = exempt
After finding out that you have made an error with the amount of VAT paid, how would you notify HMRC?
If it is more than £10k wrong (either in the quarter, or cumulatively in the year). you would need to notify HMRC.
If less than £10k, we can simply correct in next quarter’s VAT return (even if error was 12 months ago).
What are the VAT implications of a UK company selling standard-rated goods to:
a) a french VAT-registered company
b) a company in the US?
EU = despatch; USA = export.
Both are zero-rated.
For both, we need evidence of the item leaving the UK.
For French, we also need to see the French Co.’s VAT registration number.
What are the VAT implications of a UK company selling standard-rated goods to:
a) a french individual
b) an american individual?
EU = despatch; USA = export.
French individual= standard rated. As if selling to UK individual.
US individual = zero rated.
How does the duty deferrment scheme work (customs duty and VAT)?
By default, you pay CD & VAT as and when the goods are declared to HMRC.
Instead, the duty deferment scheme allows you to pay once per month instead (on the 15th).
What are the advantages of the duty deferment scheme?
As yo are only dealing with customs duty and import VAT once per month, there is admin time/cost saving.
Additionally, there is a cash-flow advantage is tax is paid, on average, 30 days later.
