VAT Flashcards
What is the agency method of paying VAT
The invoice is addressed to the client
The firm pays the invoice out of office or client account
Record one total amount, don’t separate out VAT and fee
What is the principal method of passing on the VAT
Invoice is addressed to firm
Pay out of office accounts
Pay fee and input tax then charge client same fee plus output tax
What is input tax
Supplier to business
What is output tax
Between business and client
Does a fee always include VAT
VAT is included in the fee unless explicitly stated otherwise
When is output VAT charged
On supply of good incl gifts and services excl gifts
taxable supply made to a taxable person in course of business
What is a business for VAT purposes
Any trade, profession or vocation
Who is a taxable person for VAT purposes
Someone required to be registered under the act
What is a taxable supply for VAT purposes
Solicitor supplying insurance is exempt
Disbursements are exempt from VAT
What are the two categories of taxable supply
Zero rate
Standard rate
What is a disbursement for VAT purposes
Supply of service from third party to client. You just act as representative for client in paying third party
What is not a disbursement for VAT purposes
Expenses to third party were incurred by firm in course of supplying services to client. The supply is part of the whole service given by you to your client
How to account to HMRC for VAT
Deduct output tax from input tax
