Tax Processes - Chapter 1 - Communication within VAT and payroll

Question 1

When is the latest a VAT return can be submitted to HMRC?

Answer 1

1 month and 7 days after the end of the VAT quarter

Question 2

What are the exceptions to the window in which you make payment to HMRC?

Answer 2

• Annual Accounting Scheme
• Monthly VAT returns and payments
• Payment on account arrangements

Question 3

If a direct debit is setup with HMRC when will payment be made.

Answer 3

3 days after the last submission date, 1 month and 10 days after VAT quarter end

Question 4

What errors on the VAT return do you not need to disclose?

Answer 4

• Less than £10,000
• Between £10,000 and £50,000 (and less 1% of box 6)
• Not deliberate

Question 5

What types of errors on the VAT return must you disclose?

Answer 5

• Between £10,000 and £50,000 (greater than 1% of box 6)
• Greater than £50,000
• Error made on purpose

Question 6

If you do not make VAT payments by the due date what will you be put into?

Answer 6

Default

Question 7

When will you be put into default?

Answer 7

• If HMRC has not received your VAT return even if you are owed money by HMRC
• Full payment from the return has not been received to HMRC

Question 8

When will you be put into default?

Answer 8

• If you do not submit your VAT return even if HMRC owes you money
• If the balance is not paid by due date in full

Question 9

When is the due date for POA’s?

Answer 9

Last day of second and third month of every accounting period.

Question 10

What will you be sent if you default?

Answer 10

Either a Surcharge liability notice or a Surcharge liability notice extension

Question 11

When is the surcharge period?

Answer 11

It begins on the date of the notice and ends 12 months from the end of the latest period in default

Question 12

What happens if you default during a surcharge period?

Answer 12

If this happens with VAT outstanding for that period, a default surcharge will be charged and an extension notice will be sent. You have a surcharge assessment if a surcharge is due

Question 13

What arrangements are there for small business with surcharges?

Answer 13

If your taxable turnover is less than £150,000 the first time help will be sent to fix any issues with paying on time, if you default again within 12 months a Surcharge Liability Notice will be sent

Question 14

How is the surcharge calculated?

Answer 14

First time it will be 2% of outstanding VAT at the due date and it grows to 5%, 10% and 15% for further defaults

Question 15

How is surcharge calculated on POA?

Answer 15

Any late payments on either POA or balance due will be totalled and surcharge calculated on that

Question 16

What’s the minimum surcharge on 10% to 15%?

Answer 16

£30

Question 17

What happens on surcharge 2% and 5% if it’s below £400?

Answer 17

• A surcharge is not issued
• A surcharge Liability Extension notice is issued
• Rate of surcharge is increased if you default again within surcharge window

Question 18

Why is it important to pay as much VAT as you can by the due date?

Answer 18

Surcharge is calculated on VAT not paid by due date

Question 19

Is there liability to surcharge if you pay the VAT due on time but your return is late?

Answer 19

No but you will receive a Surcharge Liability Extension Notice

Question 20

What is meant by a reasonable excuse?

Answer 20

Something which stopped you reaching a tax obligation which you took reasonable care to meet

Question 21

What can you do if you disagree with a surcharge?

Answer 21

• Ask your case to be reviewed
• Have your case heard by an independent tax tribunal

Question 22

Why might someone ask to review a default?

Answer 22

• Believe your excuse is reasonable
• Wrong surcharge rate applied
• Wrong VAT used to calculate surcharge
• Exceptional circumstance arose

Question 23

How could HMRC communicate a VAT rate change?

Answer 23

• Email
• Letter
• TV or radio
• HMRC website
• Social Media

Question 24

What changes do businesses have to notify HMRC about?

Answer 24

• Turnover
• Main business activity
• Membership of a VAT group

Notification must be within 30 days

Question 25

How much notice should HMRC get for bank details changing?

Answer 25

14 days

Question 26

What is the penalty if a paper VAT return is submitted without prior agreement with HMRC?

Answer 26

£400

Question 27

What will HMRC issue if a VAT return isn’t submitted on time?

Answer 27

VAT notice of assessment of tax

Question 28

What happens if a HMRC assessment is too low and it is not reported within 30 days?

Answer 28

30% penalty can be charged