Chapter 18 - Value of the Supply Flashcards Preview

Paper 2: Corporate Tax & VAT > Chapter 18 - Value of the Supply > Flashcards

Flashcards in Chapter 18 - Value of the Supply Deck (5)
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Consideration Wholly in Money

Gross value of supply, or VAT inclusive value, is the value of the consideration given for it.
Consideration = price of item +VAT
120% = 100% + 20%
6 = 5 + 1
5/6 of consideration is net price, 1/6 is the VAT


Prompt Payment Discount

Sometimes a discount is offered if the payment is made quickly. VAT can only be calculated on the discounted amount when the customer pays within the retired time scale. If the supplier doesn't know if the customer will pay early, VAT must be charged on the full amount and shown on the invoice. Invoice must also show the rate of discount offered.



If the discount is used, one of two adjustments should be made:
1) supplier issues a credit note; or
2) the invoice must include the terms of the discount, the timescale and a statement that the customer can only recover s input tax the VAT paid to the supplier


Deemed Supplies

Anti-avoidance measure. Occurs where a taxable business buys something, recovers the input tax and then puts those items into a private/non-business use.


Motor Fuel Provided for Private Use (Deemed Supply)

Four choices:
1) claim all input tax then charge output tax in accordance with fuel scale charges
2) claim no input tax
3) keep detailed mileage records and recover the input tax on the business miles
4) recover all input VAT and make a charge to the employee for the private fuel element