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PTX > VAT: Further Aspects > Flashcards

VAT: Further Aspects Flashcards

1
Q

What must a full VAT invoice include?

A

The word invoice
Unique identification number
Business name, address and contact info
Customer name and address
Clear description of goods/service
Date of invoice
Tax point if different
Price,
Quantity,
& VAT rate
For each item
And discount offered
Amount it charged excl VAT
Total VAT charged

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2
Q

Is it compulsory to issue VAT invoices to non VAT registered customers

A

No

Unless requested

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3
Q

When can a trader issue a simplified VAT invoice?

A

Less than of equal to
£250
VAT inclusive

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4
Q

When can a trader issue a modified VAT invoice?

A

Retail supplies
(Over £250)

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5
Q

How must all VAT registered businesses submit returns?

A

Electronically

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6
Q

VAT return form

A

VAT100

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7
Q

What does VAT100 show?

A

Total input VAT
Total output VAT

For the period

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8
Q

Who can opt to have shorter VAT return periods?
(To receive their repayments earlier)

A

Traders who regularly receive payments

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9
Q

What is the shorter VAT return period?

A

Monthly

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10
Q

VAT return due date

A

Same as for payment of VAT
(Where payment is not made by DD)

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11
Q

When is VAT payable?
(On TTs)

A

Due one month and seven days
After end of the quarter

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12
Q

What happens if a trader doesn’t submit a VAT return?

A

HMRC can issue an assessment
Showing the amount HMRC believes is due

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13
Q

How are VAT errors treated?

A

Aggregated
So that the net error is the total under-declaration of VAT less the total over-declaration

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14
Q

When are errors on VAT returns corrected?

A

On the next return
As long as it was
Small
And
Not deliberate

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15
Q

VAT: Small errors

A

Higher of:
10k
1% taxable turnover
(VAT exclusive)
Subject to a limit of 50k

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16
Q

Penalty for small errors disclosed on next VAT return

A

None

As long as neither careless nor deliberate

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17
Q

How are errors that are not small, or were deliberate treated?

A

Separately disclosed
On form VAT652

And penalties may apply

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18
Q

Due date for VAT return

A

Same as for payment of VAT

Except when payment made by DD

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19
Q

When are payments taken when a trader pays VAT by DD?
(In TTs)

A

Three working days
After normal due date
(I.e. 1m10d after end of quarter)

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20
Q

VAT: Substantial trader

A

VAT liability
Above
£2.3m
P.a.

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21
Q

What must VAT substantial traders make ?

A

Payments on account of VAT

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22
Q

VAT: Substantial traders: Payment timings

A

Months 2 and 3
In every quarter

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23
Q

VAT: Substantial traders: Amount of each payment

A

1/24th
Of annual liability
For previous year

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24
Q

VAT: Substantial traders: When are additional amounts due?

A

1m after end of the quarter

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25
Q

When can a taxable person receive VAT repayment interest?

A

Error by HMRC
Leading to:
Overpayment of output VAT
Or
Under claim of input VAT

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26
Q

When does VAT repayment interest run?

A

Later of:
Date of payment to HMRC
Due date for payment

To

Date it repayment

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27
Q

When does interest on unpaid VAT run?

A

Date should have been paid
To
Date if payment

(Exclusive)

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28
Q

VAT: When may a taxable person be charged interest?

A
  1. HMRC raises assessment for
    Under-declared output VAT
    Over-declared input VAT
  2. Taxpayer voluntarily discloses error
    That is not small
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29
Q

VAT: Is interest payable when small net error is corrected on the next VAT return

Provided payment for that VAT period is paid on time

A

No

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30
Q

Penalty if fails to register for VAT
/registers late/is incorrect

A

Common penalty regime

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31
Q

When does a VAT default occur?

A

Taxable person:
1. Files return late
2. Makes payment late

32
Q

Penalty when VAT paid late

A

Default surcharge

33
Q

VAT: Default surcharge: First default

A

None

34
Q

What happens when first VAT default occurs? (For businesses)

A

Surcharge period starts

35
Q

VAT: How long is default surcharge period?

A

12m
(Starting from end of return period)
(Usually end of the quarter)

36
Q

Penalties for each VAT payment missed during surcharge period

A

Growing

37
Q

What happens first time VAT default occurs: Businesses with taxable turnover below 150k

A

Letter offering help

38
Q

VAT: What happens if default occurs within 12m of letter of help?

A

Surcharge period starts and normal surcharge system begins
(Effectively additional chance to default)

(Assume business is not small)

39
Q

What happens if trader satisfies HMRC that there’s a reasonable excuse for filing a VAT return late?

A

The default will be ignored

40
Q

VAT: What happens for subsequent defaults (return or payment)

A

Surcharge period extended to end 12m after end of latest period of default

If VAT also paid late, default surcharge based on outstanding amount (TTs)

41
Q

VAT: Annual accounting schemes return frequency

A

Annual

42
Q

VAT: Annual accounting scheme return: Deadline

A

2m
Of end of return period

43
Q

VAT: Annual accounting schemes return: Can traders take advantage of additional 7d when filing the VAT return?

A

No

44
Q

VAT: Annual accounting schemes: Payments frequency: 2 options

A
  1. 9 payments
  2. 3 payments
45
Q

VAT: Annual accounting schemes: 9 payments: due when?

A

End of months 4-12

46
Q

VAT: Annual accounting schemes: 9 payments: amount of each payment

A

10% of previous year’s VAT liability

Time apportioned

47
Q

VAT: Annual accounting schemes: 6 payments: due when?

A

End of months 4,7 and 10

48
Q

VAT: Annual accounting schemes: 6 payments: payment amount?

A

25% of previous year’s VAT liability

49
Q

VAT: Annual accounting schemes: When balancing payment/repayment made? Not DD

A

When return filed

50
Q

VAT: Annual accounting schemes: When balancing payment/repayment made? When DD

A

3 days after return filed

51
Q

VAT: Condition to join annual accounting scheme

A

Trader’s
VAT-exclusive
Taxable
Turnover
(Including zero-rates sales)
(Excluding sales of capital assets)

Must be expected to be
NO MORE THAN
THE TURNOVER THRESHOLD
In the following 12m

52
Q

VAT: Turnover threshold to join the scheme (TT I think)

A

1,350,000

53
Q

VAT: Turnover threshold to leave the scheme (TT I think)

A

1,600,000

54
Q

VAT: Joining annual accounting scheme: Other conditions

A

Traders returns and payments must be up to date

No convictions for VAT offences
Or penalties
In prev 12m

55
Q

VAT annual accounting scheme: Leaving scheme threshold

A

Taxable supplies
From prev 12m
Exceed turnover threshold

56
Q

VAT annual accounting scheme: Advantages

A
  1. 1 return. Less administration
  2. Extra month
    (For return and balance g payment)
  3. Regular fixed payments (Budgeting)
57
Q

VAT annual accounting scheme: Disadvantages

A
  1. Payments based entirely on previous year liability
    So unattractive to businesses with declining taxable turnover
  2. Not suitable for zero-rated businesses
58
Q

VAT: Cash accounting scheme: Operation

A

Based on cash receipts and payments
(Rather than using dates of invoices issued and received)

59
Q

VAT: Cash accounting scheme: Tax point

A

Time of receipt or payment

60
Q

VAT: Cash accounting scheme: Conditions for joining

A

VAT-exclusive taxable turnover
(Including zero-rated sales but excluding sales of capital assets)

Expected to be
No more than
Turnover threshold
In the following 12m

61
Q

Turnover threshold to join VAT cash accounting scheme

A

1,350,000

62
Q

VAT cash accounting scheme: Threshold to leave the scheme

A

1,600,000

63
Q

VAT: Other conditions for joining cash accounting scheme

A

Same as annual accounting scheme

64
Q

VAT: Cash accounting scheme: Advantages

A
  1. No output VAT selling on credit until received payment
  2. Automatic bad debt relief
  3. Can combine with annual scheme
65
Q

VAT: Cash accounting scheme: Disadvantages

A
  1. Input tax not claimed until invoice paid
    Delays recovery of input VAT
  2. Not suitable for cash sales
    Or zero-rated businesses
    (Just delays recovery)
66
Q

VAT: Flat rate scheme: Operation

A

Flat rate %
Applied to gross (VAT inclusive)
Total turnover
(Exclusive of zero rated and exempt supplies)

67
Q

VAT: Flat rate scheme: % varies based on

A

Type of trade business is involved in

68
Q

VAT: Flat rate scheme: deduction conditions + amount
(Included in Q)

A

1%

First year of registration

69
Q

VAT: Flat rate scheme: Limited cost traders (Very low cost base e.g. IT contractors): %

A

16.5 %

70
Q

VAT: Flat rate scheme: How are invoices issued?

A

As usual
(With VAT charged at applicable rate)

71
Q

VAT: Flat rate scheme: How are input VAT records kept?

A

None are kept
Because not separately recovered

72
Q

VAT: Flat rate scheme: Joining limit

A

150,000

73
Q

VAT: Flat rate scheme: Leaving limit

A

230,000

74
Q

VAT: Flat rate scheme: Advantages

A
  1. Less admin (no input records)
  2. Possibly less VAT
  3. Can use with annual scheme
75
Q

VAT: Flat rate scheme: Disadvantages

A
  1. Not suitable for zero rated businesses
    (Just delays input recovery)
  2. Not suitable for businesses with high input tax compared to their sector average

PTX (14 decks)

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