VAT - further aspects

Question 1

What number is the VAT return?

Answer 1

VAT100

Question 2

How must all VAT returns be paid, submitted and retained?

Answer 2

Electronically

Question 3

When is VAT due?

Answer 3

1 Month, 7 days after the end of the quarter

Question 4

When is the payment date where a trader pays by direct debit?

Answer 4

3 working days after the normal due date (1 month, 10 days)

Question 5

What is the quota for becoming a substantial trader?

Answer 5

VAT liability exceeding £2.3 million per annum

Question 6

What is required of substantial traders?

Answer 6

Payments on account of VAT

Question 7

When and what are payments on account for VAT?

Answer 7

• End of months 2 and 3 of every quarter
• 1/24th annual liability of the previous year

Question 8

When are the additional balancing amounts due?

Answer 8

One month after the end of the quarter

Question 9

How many VAT returns are submitted per year?

Answer 9

One

Question 10

What are the VAT payment options for the annual accounting scheme?

Answer 10

• 9 Payments
• 3 Payments

Question 11

When are payments due when 9 payment option is chosen and how much? for annual accounting scheme

Answer 11

• End of months 4-12 of the year
• Each payment is 10% of the previous years VAT liability

Question 12

When are payments due when 3 payment option is chosen and how much? for annual accounting scheme

Answer 12

• End of months 4, 7 and 10 of the year
• Each payment is 25% of the previous years VAT liability

Question 13

What is used in the annual accounting scheme if the trader has been VAT registered for less than 12 months?

Answer 13

% applied to HMRCs estimate

Question 14

When is the balancing payment made for both the above options?

Answer 14

When the return is made (or 3 working days later when using direct debit)

Question 15

When are the annual VAT returns due?

Answer 15

2 Months after the end of the return period

Question 16

When is the tax point under the cash accounting scheme?

Answer 16

Time of receipt or payment

Question 17

what is the cash accounting scheme?

Answer 17

VAT is accounted for based on cash receipts and payments, rather than using the dates of invoices issued and received

Question 18

What is the turnover threshold for joining and leaving the annual or cash accounting scheme?

Answer 18

• £1,350,000
• £1,600,000

Question 19

What are the other conditions to join the annual or cash accounting scheme?

Answer 19

• Previous VAT returns and payments must be up to date
• No convictions of VAT related offences or penalties in last 12 months

Question 20

what should a VAT invoice contain?

Answer 20

• unique identification number
• business name,adress and contact information
• the name and address of the customer
• clear description of the good or service
• date of invoice and tax point if different
• the price quantity and VAT rate for each item
• any discount offered
• the amount charged excluding VAT
• the total VAT charged

Question 21

what if a VAT invoice is less than £250 (VAT inclusive)

Answer 21

trader can issue a simplified invoice

Question 22

What is the VAT payable to HMRC formula under the flat rate scheme?

Answer 22

Total Turnover (VAT inclusive) x Flat Rate %

Question 23

What does the Total Turnover include?

Answer 23

• Zero-Rated supplies
• Exempt supplies
• Supplies of capital assets

(dont takeaway inputs)

Question 24

what are the conditions for joining and leaving the flat rate scheme?

Answer 24

• Annual taxable turnover limit (excluding VAT) to join = £150,000
• Annual total income (including VAT) to leave= £230,000

Question 25

Can errors in VAT returns be corrected separately?

Answer 25

No, they must be aggregated to a Net Error

Question 26

What are small errors?

Answer 26

Small errors must not exceed the higher of:
- £10,000
- 1% of Taxable Turnover, subject to a limit of £50,000

Question 27

How are small errors treated?

Answer 27

They can be disclosed on the next VAT return and will not receive a penalty as long as they were not careless or deliberate

Question 28

What happens to errors that cannot be classified as small, or were deliberate (including the VAT form number)?

Answer 28

They must be separately disclosed on a VAT652 and penalties may apply

Question 29

what is interest on unpaid VAT?

Answer 29

• HMRC raises an assessment for output VAT under-declared or input VAT over-claimed
• Taxpayer voluntarily discloses an error that is not small

Question 30

what days does interest run from for interest of unpaid VAT?

Answer 30

The date the VAT should have been paid until date of payment
(no interest charged where small error is corrected on the next VAT return

Question 31

when can interest on overpaid VAT occur?

what are the dates?

Answer 31

• taxable person may receive repayment interest only where there has been an error by HMRC leading to overpayment or underclaim
• Runs from the later of the date of payment to HMRC and the due date for payment, to the date of repayment