Module 13: Further Aspects of VAT

Question 1

Calculating input tax recoverable - Step 1

Answer 1

Directly attribute input tax to taxable and exempt supplies as far as possible

Question 2

Calculating input tax recoverable - Step 2

Answer 2

Calculate VAT recovery percentage

Question 3

Calculating input tax recoverable - step 3

Answer 3

Use the percentage to apportion unattributable input tax to taxable and exempt supplies

Question 4

Calculating input tax recoverable - step 4

Answer 4

Check whether the irrecoverable input tax is de minimis

Question 5

Calculating input tax recoverable - step 5

Answer 5

Calculate the total recoverable input tax

Question 6

VAT recovery percentage

Answer 6

Taxable supplies / total supplies

Rounded up to the nearest %

Question 7

De minimis limit

Answer 7

If the input tax attributed to exempt supplies is:
- < £625 per month on average (£1875 per quarter and £7500 per year)
AND
- < half the total input tax in the period

Question 8

If input tax attributable to exempt supplies is within de minimis limit

Answer 8

Can be recovered

Question 9

Changes to partial exemption calculations - use PY %

Answer 9

Can base calculations on PY overall recovery percentage

Question 10

Changes to partial exemption calculations - timing of adjustment

Answer 10

Can make annual adjustment in final VAT return of VAT year instead of first VAT return after end of VAT year

Question 11

Supply of land or buildings

Answer 11

Exempt

Question 12

Sale of new (< 3 year) commercial building

Answer 12

Exception

20% standard rated

Question 13

Sale of brand new residence

Answer 13

Exception

Zero rated

Question 14

Services for qualifying conversion of residential property

Answer 14

Exception

5% reduced rate

Question 15

Opting to tax

Answer 15

Makes an exempt supply a standard rated supply

Question 16

Option to tax can be on a

Answer 16

Property by property basis

Question 17

Option to tax is

Answer 17

Fundamentally irrevocable - apart from in first 6 months or after 20 years

Question 18

Group registration - supplies between group members

Answer 18

Ignored for VAT purposes

Question 19

Group registration - input tax

Answer 19

Input tax incurred by group companies is attributed to the group’s use of the input in making supplies to third parties, not the individual company’s use

Question 20

Advantage of grouping (4)

Answer 20

• simpler the prepare one VAT return
• supplies between group members are ignored
• can include small wholly exempt company and recover de minimis
• greater central control of tax affairs

Question 21

Disadvantages of grouping (5)

Answer 21

• difficult to collect all info needed
• can be advantages to charging VAT on intra-group supplies
• every company in group is jointly liable
• group may be more likely to exceed £2.3m POA threshold
• higher default surcharges