VAT & corporation tax

Question 1

What are the four rates of VAT and how do they apply?

Answer 1

Standard rate (20%) - used for most goods & services
Reduced rate (5%) - based on item & circumstances of sale
Zero rate (0%) - still VAT-able but charged at 0%
Exempt - VAT not charged at all

Question 2

If a business pays input VAT, but not output VAT, can it claim the difference back from HMRC?

Answer 2

Yes

Question 3

Describe the Flat Rate VAT scheme.

Answer 3

Flat rate of 16.5% applied to gross turnover
Need to have VATable turnover of >£150,000
Must stop when turnover >£230,000

Question 4

Describe the cash accounting scheme.

Answer 4

VAT on outputs only due when payments made, not when invoiced
Annual turnover must be <£1.35m

Question 5

Can class 1 secondary NICs be deducted from a company’s corporation tax bill?

Answer 5

Yes

Question 6

When is a company’s corporation tax liability due?

Answer 6

9 months and 1 day after company’s accounting period ends

Question 7

What are the fines for late filing?

Answer 7

Day late - £100
3 months late - £100
6 months late - 10% of estimated tax due
12 months late - 10% of estimated tax due

Question 8

How frequently is VAT usually paid?

Answer 8

Quarterly