An Introduction to VAT (7)

Question 1

What if a business pays for fuel which is only used for business purposes?

Answer 1

It can claim all input tax paid on that fuel

Question 2

What if a business does provide fuelf ro private and business use to an employee, but the employee reimburses the business the full cost of private fuel?

Answer 2

An actual taxable supply by business valued atn amount received from that employee

Question 3

When will HMRC accept that the full cost of all private fuel it has reumbursed?

Answer 3

Where a log is kept recording private miles and emplouee pays a fuel-only mileage rate that covers average fuel cost

Question 4

What if a business provides fuel to its employees for private use without charge or at charge below full cost?

Answer 4

It is a deemed taxable supply

Question 5

How to account for VAT on fuel (not claim input)

Answer 5

Not to claim any input tax in respect of fuel purchase by business. No output tax is charged

Question 6

How to account for VAT on fuel (claim jounrey)

Answer 6

Claim input VAT only on fuel purchased for business journeys. No output tax is charged in respect of private use

Question 7

How to account for VAT on fuel (claim all)

Answer 7

Claim input tax on all fuel purchased and charge output tax either on full cost of private fuel supplied or VAT fuel scale charge

Question 8

What is the fuel scale charge based on?

Answer 8

CO2 emissions of the car and length of period

Question 9

When must notify HMRC when exceed £85000 (historical)?

Answer 9

30 days after amonut > £85000 threshold (end of month). Then registered at beginning of next month

Question 10

When must notify HMRC when exceed £85000 (future)?

Answer 10

Immediately after amonut > £85000 threshold (end of month). Then registered at beginning of that month

Question 11

VAT reclaim fraction for input tax (VAT inclusive)?

Answer 11

Expenditure * 20/120

Question 12

VAY return for quarter ended 31 March 2023 should be submitted by?

Answer 12

7 May 2024

Question 13

Where a taxpayer simply makes a mistake?

Answer 13

No penalty

Question 14

Where a taxpayer fails to take reasonable care?

Answer 14

Up to 30% of the understated tax

Question 15

Where a taxpayer makes a deliberate error?

Answer 15

Up to 70% of the understated tax

Question 16

Where a taxpayer makes a deliberate and concealment of error?

Answer 16

Up to 100% of the understated tax

Question 17

De-minimus level is greater of?

Answer 17

£10000 AND 1% * turnover (with upper limit of £50000)

Question 18

Is there daily penalty if more than 30 days late?

Answer 18

YES

Question 19

Paid after 30 days?

Answer 19

4% + 4% every day

Question 20

Calculate VAT payable (VAT repayment)?

Answer 20

Output VAT - Input VAT

Question 21

Basic tax point?

Answer 21

When goods were delivered

Question 22

When a VAT registered trader should notify HMRC of ceasing activity?

Answer 22

Within 30 days of ceasing. Not until the end of the month

Question 23

When is input VAT on a car not recoverable?

Answer 23

When there is private use

Question 24

VAT invoices and retention?

Answer 24

Within 30 days and six years

Question 25

When is 50% of input tax deductible on leased car?

Answer 25

When there is some private use

Question 26

If VAT invoice is issued within 14 days after basic tax pount and payment not received before basic tax point?

Answer 26

Invoice date becomes the tax point

Question 27

If input VAT is not recoverable?

Answer 27

Don’t multiply by 1/6, instead do 20%

Question 28

When can business join flat rate scheme?

Answer 28

Tax exclusive annual taxable turnover up to £150000

Question 29

When can business leave flat rate scheme?

Answer 29

Tax inclusive annual turnover up to £230000

Question 30

A sale of a business as a going concern?

Answer 30

It is outside the scope of VAT

Question 31

VAT inclusive scale charge (input or output)?

Answer 31

Output

Question 32

When question has VAT inclusive amounts and asking what can be reclaimed?

Answer 32

Multiply by 20/120

Question 33

When question has VAT exclusive amounts and asking what VAT can claim?

Answer 33

Multiply by rates (e.g. 20%, 5%)

Question 34

When can impaired debt be reclaimed?

Answer 34

Once debt has been outstanding for six months from due date. So in October, it will be reclaimed in June 2024 as that’s end of quarter after 6 months

Question 35

Entertaining UK customers?

Answer 35

VAT

Question 36

Impairment loss on output tax?

Answer 36

Is added to the working

Question 37

Calculate interest charge?

Answer 37

VAT liability * 6.5% * (n/365)

Question 38

When there’s late filing?

Answer 38

£200 charge added

Question 39

When to register for flat rate scheme?

Answer 39

Flat rate scheme < normal VAT rules

Question 40

Go from VAT exclusive to inclusive?

Answer 40

Multiply by 1.2

Question 41

Register for VAT (historical)

Answer 41

At beginning of month

Question 42

Notify HMRC for VAT (historical)

Answer 42

At end of month

Question 43

If business services supplied within 6 months prior to registration?

Answer 43

Qualifies for pre-registration input tax. But no relief given

Question 44

When are penalty points occurred?

Answer 44

For late filing, not late payments

Question 45

When is relief given for impairment losses?

Answer 45

Once six months have expired from the time when payment was due

Question 46

Mobile telephone calls?

Answer 46

Only business use can be classified as input VAT

Question 47

Flat rate scheme calculation?

Answer 47

Sales * flat rate percentage

Question 48

When is actual tax point for balancing payment the date the invoice was issued?

Answer 48

As it was within 14 days of basic tax point

Question 49

VAT on export?

Answer 49

Zero rated

Question 50

VAT on import?

Answer 50

% applied

Question 51

When provided with free fuel for a company car.

Answer 51

Entire VAT is included

Question 52

When company operates under cash accounting scheme (tax point)?

Answer 52

Tax point is when payment is received from the customer

Question 53

Cash accounting scheme and relief for impairment losses?

Answer 53

Relief for impairment losses are given automatically

Question 54

If a business pays for fuel which is only used for business puirposes?

Answer 54

It can claim all the input tax

Question 55

When is input VAT recoverable for goods?

Answer 55

Goods acquired not more than four years prior to registration and sold/used in business after registration

Question 56

Where can a company be included in a UK VAT group?

Answer 56

If it based in the UK

Question 57

What represents the basic tax point?

Answer 57

The delivery date

Question 58

What is insurance classifed as?

Answer 58

Exempt

Question 59

Benefit of voluntary registration?

Answer 59

If he makes only zero-rated supplies and has input VAT he can recover

Question 60

When can a trader join the flat rate scheme?

Answer 60

If VAT exclusive turnover for the next 12 months is not expected to exceed £150000

Question 61

Tax point on balance if invoice was issued more than 14 days after the basic tax point (when goods were despatched)?

Answer 61

Day where goods were despatched

Question 62

Tax point on balance if invoice was issued less than 14 days after the basic tax point (when goods were despatched)?

Answer 62

When invoice was issued

Question 63

If customer pays for services before basic tax point?

Answer 63

Payment date will be the tax point

Question 64

When to register and notify for VAT (future)

Answer 64

Notification: 30 days after
Register: when contract signed

Question 65

When to register and notify for VAT (historical)

Answer 65

Notification: End of next month
Register: Start of month after that