Lesson One

Question 1

what is VAT ?

Answer 1

Indirect tax on customers spending
charged on most goods and services in uk
collected by business on behalf of HMRC.

Question 2

What is tax ?

Answer 2

Public services,such as schools, hospitals ,roads and bin man are funded by taxation.

Question 3

what is taxation?

Answer 3

Taxation is something that the government does, so they take money from the people whom it governs.

Question 4

What is council tax?

Answer 4

Direct tax because its going to a particular individual or household.

Question 5

who pays council tax? and how much?Then where will it go ?

Answer 5

People who live in a flat, house or mansion and the amount depends on property worth.Then it will go to Public services.

Question 6

What is council tax called for businesses?

Answer 6

Business rates

Question 7

What is corporation tax?

Answer 7

Taxing businesses on their profit.

Question 8

What is sales tax or VAT?

Answer 8

Adding tax to the price of goods sold by the business.

Question 9

What does VAT stand for?

Answer 9

Value added tax

Question 10

What month is the end of the tax year ?

Answer 10

April

Question 11

What is indirect tax? and give an example?

Answer 11

When tax is collected and paid to the government by a third party e.g sales tax aka vat

Question 12

What benefit does a company get from having vat charged on their products or services?

Answer 12

They can reclaim any VAT charged.

Question 13

What is Input tax?

Answer 13

It is purchases tax.

Question 14

What is output tax?

Answer 14

It is sales tax.

Question 15

What is standard rate for VAT?

Answer 15

20%

Question 16

What is income tax?

Answer 16

Taxing income on earnings,saving and property. When you earn income tax will be taken from your earnings.

Question 17

What is reduced rate for VAT?

Answer 17

5%

Question 18

What is zero rated for VAT?

Answer 18

0%

Question 19

What are examples of reduced items?

Answer 19

Domestic fuel like gas and electric sold to private homes and children car seat.

Question 20

What are examples of zero rated items?

Answer 20

Children clothes, Motor cycle helmets, most food stuff and printed books and newspapers.

Question 21

What are examples of exempt items?

Answer 21

Education, Vocational training , healthcare , loan , finance , funerals , postage and lottery tickets.

Question 22

What is the difference between zero rated and exempt?

Answer 22

zero rated is subject to vat but exempt are not and zero rated you can reclaim vat and exempt you cant.

Question 23

What vat can a business reclaim vat on if they have both exempt and rated items?

Answer 23

They can only reclaim on the rated items they sell.

Question 24

Give an example of goods outside the scope of VAT?

Answer 24

Congestion charge and sale you make off an hobbie.

Question 25

What is staple?and give example?

Answer 25

Dont have to pay vat on it.e.g. Basic biscuits like digestives

Question 26

What is luxury?give an example?

Answer 26

20% tax on it e.g. sweet , choc and crisp.

Question 27

Can you charge vat on customers if not registered with HMRC?

Answer 27

No you must be registered or have the intention to be registered when turnover exceeds.

Question 28

What is the VAT threshold amount ?

Answer 28

85k

Question 29

If you reach threshold do you have to register?

Answer 29

Yes, you must.

Question 30

What is a club or association that charges annual membership or a charity that trades as part of fundraising classed as?

Answer 30

Business for VAT purpose.