VAT

Question 1

What is VAT chargeable on

Input v Output

When pay to HMRC

Answer 1

• taxable supplies (goods & services)in Uk
• purchases from EU businesses
• purchases imported into UK from outside EU
• Overseas services to Uk resident

Trader registered for VAT must charge output VAT on taxable supplies they sell and pay input on supplies they buy
If output more than input VAT, residue goes to HMRC (and reclaim if reverse true) except car purchase and business entertainment

Question 2

When to register VAT

Answer 2

• Must register if taxable supplies in excess of VAT threshold
• Must inform HMRC within 30 days of end of month when taxable supplies for last month exceeded VAT threshold.
• registration is effective from the 1st of the 2nd month after limit breached
• If trader expects supplies to exceed VAT threshold in next 30 days, must inform HMRC registration effective from start of 30 days.

Question 3

Exempt supplies

• Taxable supplies

Answer 3

• finance, insurance ,education, health, burial and cremation services
• Taxable supplies
  Zero rate
  Most food & drink, domestic supplies of water and sewerage, books, new residential buildings,
• reduced rate - domestic fuel ,installation of energy saving material, certain renovations
• Standard rate

Question 4

Collecting VAT-

Answer 4

Paid every 3 months