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Tax processes for businesses (finance act 2023) > VAT and business documents > Flashcards

VAT and business documents Flashcards

1
Q

When must a VAT registered business give or send a VAT invoice to a purchasewr ? P27

A
  • 30 days of the earlier:
  • supply
  • receipt of payment
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2
Q

What MUST a vat registered business have to be able to claim back input tax ? P27

A
  • Valid VAT invoice - supplier
  • contents HMRC guide
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3
Q

What must a full VAT invoice show ? P27 - 10 POINTS

A
  • Sequential number
  • date
  • tax point
  • supplier - name , address, and VAT number
  • customer - name and address
  • description : - quantity , vat per item , payable (exc vat) , disciunt per item
  • net amount
  • discounts
  • VAT amount
  • unit price/ rate
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4
Q

When is a VAT invoice deemed to have been issued ? P30

A
  • Handed or sent to customer
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5
Q

What are the advantages of electronic invoices ? P30

A
  • Instant
  • Retrieval
  • Reduced and postage
  • improved cash flow
  • secure transfer
  • dispute handling
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6
Q

What formats can electronic invoices be in ? P30

A
  • XML
  • PDF
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7
Q

How must businesses that supply goods/services zero rated or exempt from VAT display those items on the invoice ? P30

A
  • Must show - no vat
  • shown separately
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8
Q

What are invoices that only have zero rated / exempt supplies ? P30

A

Not VAT invoice

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9
Q

When can a simplified invoice be issued ? p30

A

Total value £250 or less

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10
Q

What should be included on a simplified invoice - 6 points ? P30

A
  • Sequential invoice number
  • Supplier name and address
  • tax point
  • description
  • VAT rate per itm
  • Payable - each rate - including VAT
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11
Q

Can a simplified invoice include any exempt supplies on it ? P31

A

No

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12
Q

What are modified invoices ? P31

A
  • Inclusive product price
  • £250 totalling more
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13
Q

When can a modified invoice only be issued ? P31

A
  • Customer agrees
  • Direct to customer rather than business
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14
Q

When would a VAT invoice not be needed ? P31

A
  • Buyer not registered
  • seller is retailer
  • free sample
  • self-billing
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15
Q

What is a pro forma invoice ? P31

A
  • document - goods at certain price
  • payment - goods supplied and normal invoiced after
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16
Q

Why would a seller issue a pro forma invoice ? P31

A
  • credit risk
  • payment up front
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17
Q

What is the main difference between a pro forma invoice and a normal invoice ? P31

A
  • Cannot reclaim
  • ‘Not VAT invoice’
  • separate vat invoice
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18
Q

Why may some consumers need a VAT receipt from a seller ? P33

A
  • Business expense
  • to reclaim
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19
Q

What must a VAT reciept show ? P33

A
  • Retailer - name, address, VAT no
  • item with different VAT - separate
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20
Q

What are the 4 main VAT calculations to consider ? P34

A
  • Different rates
  • Rounding
  • content of figure
  • after discount
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21
Q

How is the VAT automatically calculated ? P34

A
  • Software packages
  • Coded for invoice- correct rate
  • electronic tills - barcode/ prodce code
22
Q

What is a problem that arises when calculating VAT manaully ? P34

A

Rounding issues

23
Q

What does the HMRC permit when rounding VAT P34 ?

A
  • Round down total
  • nearest whole penny
24
Q

How should the VAT of each line on an invoice be rounded ? P34

A
  • Up / down - nearest 0.1pence
25
When would you have to calculate VAT included in the total of an invoice ? P35
* Invoice - figures including VAT Not separately identified
26
What is the calculation for finding the VAT element of the gross amount ? P35
(Gross amount/ 1.20) * 0.20 = vat amount
27
What is an alternative way of calculating VAT elements ? P35
* Fraction * 20/120 = 1/6 * divided by 6
28
What would the alternative calculation be for the reduced rate of vat ? P35
* 5/105 = 1/21 * divide by 21
29
Where are the current VAT fractions published ? P35
* HMRC VAT guide
30
What does the HMRC require about processing VAT and Trade discounts ? P36
* Invoiced amount after discount
31
What does the HMRC require about processing invoices and prompt payment discounts ? P36
* money customer pays
32
What are the alternatives to dealing with a prompt payment disocunt ? P36
* Issuing a credit note * statement included on the invoice
33
How does issuing a credit note account for ppd? P36
* lower amount of VAT - HMRC * credit note to customer
34
How does a PPD statement included on the invoice account for VAT ? P36
* statement - terms of PPD * only recover - actual VAT amount
35
What is the tax point for a taxable supply ? P38
Date supply took place
36
What are the two types of tax points that the HMRC makes a distinction between ? P38
* Basic tax point * Actual point
37
What is the basic tax point for businesses that supply goods ? P38
* Despataches goods * collect them * makes them available (assembly)
38
What is the basic tax point for a business that supplies services ? P38
* Service carried out * work is completed
39
When can the rules for basic tax points be set aside ? P38
* Actual tax point
40
What is the actual tax point/ when does this apply ? P38
* Invoice issued within 14 days - basic tax point * Invoice date = actual tax point * later date
41
What are advance payments in the context of tax points ? P38
* VAT invoice issued/ payment received - before basic tax point
42
What is the actual tax point the earlier of, when advance payment is received ? P39
* Date of VAT invoice * date advanced payment received
43
When would the business include VAT on the reutnr , for advanced payments ? P39
* Actual tax point for payment
44
What is the actual tax point for purchases with a deposit put down by the customer ? P39
* VAT invoice issued - for deposit * date deposit received
45
When would a business account for VAT for the deposit on the VAT return ? P39
* Tax point occurs
46
What can happen if a business supplies service to a customer on a continuous basis ? P39
* Issue invoices regularly * tax point - everytime invoice is issue/ payment made
47
What is sales/ return ? P40
* agrement with supplier * payment - goods actually sold * unsold goods = return
48
What is the tax point for goods on sale or return ? P40
* Adoption date * date of payment (not deposit) * 12 months - Goods sent
49
What is payment by instalment ? P40
* instalment - agreed period of time * property until full payment - conditional sale * basic tax point creation = goods handed over * full value *
50
Why is the principle of tax point important to a vat registered business ? P40
* consistent and accurate - * improved cashflow reclaim * special VAT schemes eligibility

Tax processes for businesses (finance act 2023) (6 decks)

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