An Introduction to VAT (1) Flashcards
What is a taxble supply?
Either standard-rated or zero-rated. Standard rate is 20%
What is the reduced rate?
5% (e.g. domestic fuel)
What happens with zero-rated supplies (%)?
Taxable at 0%
What is meant by a taxable supplier?
Whose outputs are zero rated but whose inputs are standard rated will obtain repayments of VAT paid on purchases
What happens to a person making exempt supplies?
They are unable to recover VAT on inputs
What must exempt supplier do?
Shoulder the burden of VAT
Is an exempt supply chargeable to VAT?
It is not chargeable
Exempt supplier and VAT invoice?
They can’t issue a VAT inmvoice which would enable a taxable customer to obtain a credit for BAT, since no VAT is chargeable on their supplies
Examples of standard-rated?
Most goods/services
Examples of zero-rated?
Non-luxury food
Books
Children’s cothes and footwear
Examples of exempt?
Burial services
Health services
Non-profit-making education
First- and second-class postage stamps
What is the value of supply?
VAT-exclusive price on which VAT is charged
What is consideration of supply?
Consideration for a supply is the amount paid in money or money’s worth
What is VAT inclusive price?
Value + VAT
What is the consideration for a bargain made at arm’s length is paid in money?
Value for VAT purposes is the VAT exclusive price charged by the trader
