VAT Processes Chapter 4 - VAT return

Question 1

Name 5 Debit entries into the VAT account?

Answer 1

VAT Purchases
VAT on cash purchases
Correction of errors from previous VAT returns (not exceeding £10,000)
Postponed VAT on imports
Bad debt relief

Question 2

Name 4 Credit entries into the VAT account?

Answer 2

VAT on sales
VAT on cash sales
Correction of errors from previous VAT return (not exceeding £10,000)
Postponed VAT on imports

Question 3

What does box 1 contain in the VAT return?

Answer 3

Sales:
Total of output VAT on sales (credit and cash) minus any VAT credit notes (Sales returns)
Plus VAT on imports - postponed accounting,
Plus any VAT on fuel scale charges.

Question 4

What does Box 2 contain?

Answer 4

Nil

Question 5

What does Box 3 contain?

Answer 5

The total of box 1 and 2

Effectively the total of box 1

Question 6

What does box 4 contain?

Answer 6

Purchases:
Total of the input VAT on purchases
Less the VAT on any credit notes (Purchases returns),
Plus VAT on imports
Plus bad debt relief (VAT on irrecoverable debt)

Question 7

What does Box 5 contain?

Answer 7

Box 4 - Box 3

Question 8

What does Box 6 contain?

Answer 8

Total of all sales (excluding VAT), less any credit notes
Should contain total of Standard + Zero + Exempt supplies + VAT EXCLUSIVE fuel scale charge
+ supplies to EU and none EU states

Question 9

What does Box 7 contain?

Answer 9

Total of all purchases (excluding VAT), less any credit notes
Should contain Total of Standard + Zero + Exempt supplies
Vat exclusive total of import

Question 10

How long do VAT registered traders have to submit and pay the VAT returns using the MTD software?

Answer 10

1 month and 7 days,
EG: If the quarter ended on 31 May then the VAT return would have to be submitted on 7th July

Question 11

How long do VAT registered traders have to submit and pay the VAT returns using a Direct Debit?

Answer 11

1 month and 10 days

Question 12

Name all the records for output tax?

Answer 12

Sales daybook
Sales return daybook
Cash book - receipts side

Question 13

Name all the records for input tax?

Answer 13

Purchases daybook
Purchase Returns daybook
Cash book - payments side
Petty cash book

Question 14

Is bad debt output or input tax?

Answer 14

input

Question 15

Which box tells us whether we reclaim or pay vat to hmrc

Answer 15

box 5

Question 16

If £50 VAT is paid in march and the rest of the VAT (£250) is paid in april which quarter/quarters are these figures included in the VAT return

Answer 16

£50 is included in 1st Quaterly VAT return and the rest in the 2nd quaterly VAT return

Question 17

Is £2,000 Postponed accounting input or output vat?

Answer 17

Both

Question 18

When reconciling the Vat return with the Vat trial balance how do you work out the input and output vat for the reconciliation?

Answer 18

Output tax on closing trade receivables - figure of closing trade receivables/6
Input tax on closing trade payables - figure of closing trade payables/6

Question 19

What is MTD?

Answer 19

Making tax digital is a HMRC requirement for VAT Registered businesses to keep digital records and submit VAT refunds using compatible software

Question 20

When should you not sign up for MTD?

Answer 20

7 days before the return is due or 5 days after otherwise the business paying by direct debit might end up paying twice

Question 21

If the vat return is not returned by the due date what will happen?

Answer 21

1st offence = surcharge liability notice (12 month period)
If the business defaults again within 12 months then the business will pay a surcharge

Question 22

Is payment to HMRC input tax or output tax

Answer 22

Neither