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Af1 > VAT & corporation Tax > Flashcards

VAT & corporation Tax Flashcards

1
Q

What is VAT

A

Value added tax

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2
Q

What are the rates of VAT

A

Zero and standard 20%

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3
Q

How much is the reduced rate of VAT

A

5%

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4
Q

What goods are reduced rate of VAT payable on

A

domestic fuel, installation of energy saving materials and certain property renovations

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5
Q

What is output VAT

A

VAT payable on goods and services sold

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6
Q

What is input VAT

A

VAT payable on goods and services purchased

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7
Q

Who charges customers VAT

A

VAT registered traders

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8
Q

What type of VAT does a VAT registered trader charge

A

output VAT on taxable supplies of goods and services

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9
Q

How does VAT work in practice

A

input VAT is offset against output VAT and any excess is paid to HMRC. any excess VAT paid is reclaimed

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10
Q

What is the threshold for registering to become a VAT registered trader

A

if value of taxable supplies on previous 12 months is more than £85k or likey to be in the next 30 days

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11
Q

When can you start to reclaim VAT on business related purchases

A

once registered

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12
Q

What kinds of supplies are taxable to VAT

A

all unless specifically exempt

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13
Q

what are examples of exempt supplies

A

insurance, finance, education and burial/cremation services

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14
Q

what is a partially exempt business

A

where a business makes exempt and taxable supplies

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15
Q

what are zero rated supplies

A 
most food and drink (not catering)
domestic supplies of water and sewage
books and hard copy publications (not ebooks)
sale of new residential buildings
public transport of passengers
drugs medicine and disability aids
childrens clothes and footwear
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16
Q

What is the flat rate scheme

A

it allows small businesses to account for VAT as a percentage of their taxable turnover rather than the difference between input and output

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17
Q

what is the flat rate %

A

16.5% for limited cost traders but % varies according to business sector

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18
Q

How is the flat rate set

A

according to average percentage of gross sales paid over as VAT to HMRC for that sector

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19
Q

What is the maximum annual turnover to qualify for the flat rate scheme

A

£150,000 Excl VAT

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20
Q

What is the margin scheme

A

VAT scheme for dealers in second hand goods

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21
Q

How is the VAT calculated on second hand goods

A

difference between price paid for an item and the price at which it is sold

22
Q

Do sales made to businesse s registered in other EU countries need to charge VAT

A

No

23
Q

Do sales to individuals in other EU countries need to charge VAT

A

yes

24
Q

When is the VAT accounted for on acquisition of goods/services from registered traders in other EU states

A

on next VAT return not on importation

25
Q

What happens if a customer doesn’t pay the VAT

A

no immediate relief for trader

26
Q

How often is VA normally paid

A

every 3 months

27
Q

if you regularly reclaim VAT from HMRC ow often can you submit and pay VAT

A

monthly

28
Q

what is maximum annual value of taxable supplies before you can elect fro annual tax return

A

£1,350,000

29
Q

What else can you elect to do if your annual value of taxable supplies is less than £1,350,000

A

elect to pay on cash basis instead of invoice basis and can elect for annual tax return.

30
Q

who pays corporation tax

A

companies

31
Q

what is corporation tax charged on

A

income and chargeable gains made by companies

32
Q

how i corporation tax accounted for if a companies accounting period straddles 2 financial years with different corporation tax rates

A

profits are apportioned

33
Q

what is the current rate of corporation tax

A

19%

34
Q

what is the maximum length of an accounting period

A

12 months

35
Q

how are chargeable gains calculated for corporation tax

A

calculated according to capital gains tax rules

36
Q

when was indexation allowance removed

A

01/01/2018

37
Q

can you offset chargeable losses against trading profit or investment income

A

no

38
Q

Are entertaining expenses included in taxable profut

A

yes

39
Q

what do expenses have to be in order to be an allowable deduction

A

wholly and exclusively incurred for the purpose of business

40
Q

are gift aid allowable expenses

A

yes

41
Q

when does corporation tax have to be paid

A

9 months 1 day following end of accounting period

42
Q

how often do large companies pay corporation tax

A

quarterly

43
Q

What cna trading losses be offset against

A

other income/ chargeable gains made in the same accounting period

44
Q

how far back can trading losses be carried back

A

preceding 12 months - must be set against current accounting period first

45
Q

How long do you have to claim trading losses

A

2 years from the end of the loss making period

46
Q

what is the maximum profit level before losses are reduced

A

£5 million

47
Q

How is loos relief restricted if profits are in excess of £5 million

A

£5 millio plus 50% of profits above £5 million

48
Q

what is a close company

A

a company controlled by 5 or less shareholders or by its directors only

49
Q

what are the benefits for a close company

A

loans by the company to it’s proprietor are not taxable

interest on loans to buy close company shares are an allowable deduction for income tax

50
Q

what is a close investment company

A

a close company that doesn’t trade but has investment income

51
Q

When is a company incorporated overseas a UK resident

A

if the central management is UK controlled

Af1 (18 decks)

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