F Rules

Question 1

VAT is?

Answer 1

An indirect tax and is administered by HMRC

Question 2

Exempt supplies for VAT purposes?

Answer 2

Land and buildings

Financial services and insurance

Educational services

Question 3

Are wages and dividends relevant for VAT?

Answer 3

No

Question 4

Historical test for compulsory registration?

Answer 4

From the first day of the second month after the limit is exceeded.

Question 5

Future prospects test for compulsory registration?

Answer 5

From the date the grounds first existed, i.e. the start of the 30 day period.

Question 6

When may a taxable supplier voluntarily deregister?

Answer 6

If taxable supplies in the next 12 months will be £83000 or less

Question 7

How long does HMRC have to deny or modify the group registration application?

Answer 7

90 days

Question 8

What happens with disallowed input VAT for income and corporation tax?

Answer 8

Ranks as a deductible expense for income tax and corporation tax

Question 9

What happens with disallowed input VAT on capital items qualifying for capital allowances?

Answer 9

Will rank as part of cost for capital allowance purposes,

Question 10

The actual tax point (when goods are received) is the basic tax point unless?

Answer 10

Payment is received before the basic tax point; or
An invoice is issued before the basic tax point; or
An invoice is issued within 14 days after the basic tax point.

Question 11

Provided there is some business use of a car? (Input VAT)

Answer 11

The full amount of input VAT in respect of repairs can be reclaimed.

Question 12

When road fuel is provided free of charge by the business for private use of employees?

Answer 12

All input VAT (for both private and business mileage) can be recovered, but the private use element is then normally accounted for by way of an output VAT purposes is a scale charge for each tax period.

Question 13

Where the full cost of private use fuel is charged to an employee or director?

Answer 13

The business can reclaim the input VAT but accounts for output VAT on the charge to the employee or director (i.e. instead of the scale charge).

Question 14

When are VAT impairment losses are given in respect of an impairment cost if?

Answer 14

The debt has been written off in the accounts

At least six months has elapsed since the later of the date of supply and the due date for payment

Question 15

Where is output VAT charged?

Answer 15

On imported goods

Question 16

When must VAT returns be submitted?

Answer 16

Within one month and seven days of the end of the relevant VAT quarter, to avoid penalties

Question 17

Failure to retain appropriate records for the required time for VAT?

Answer 17

Will attract a penalty not exceeding £3,000

Question 18

When can suppliers issue less detailed tax invoices?

Answer 18

Of the VAT inclusive value does not exceed £250

Question 19

What is included on a less detailed VAT invoice?

Answer 19

Date of delivery

Name, address and VAT registration number

Suitable description of each type of goods

Rate of VAT

Total amount including VAT

Question 20

What is output VAT due on?

Answer 20

Sales of goods (including non-current assets) and services in the UK

“Imports” of goods and services from outside the UK

Taxable supplies of goods and services taken from the business for personal use.

Question 21

What is input VAT due on?

Answer 21

Goods (including non-current assets) and business services acquired in the UK

Goods and services imported into the UK

Goods and services taken from the business for personal use provided output VAT was paid on the values taken.

Question 22

When is an error in VAT tax period regarded as immaterial?

Answer 22

Higher of £10000 and 1% of turnover up to a limit of £50000

Question 23

If a penalty threshold of four points is reached?

Answer 23

A £200 penalty is then charged

Question 24

What do subsequent late VAT returns also incur after the £200 penalty?

Answer 24

Subsequent late VAT returns also incur a £200 penalty

Question 25

When do penalty points normally expire?

Answer 25

After two years

Question 26

What must be done for penalty points to exprre?

Answer 26

A business has to submit VAT returns on time over a period of 12 months

Question 27

When is no penalty charged for VAT liability?

Answer 27

If the VAT liability is paid within 15 days of the due date

Question 28

When is a 2% penalty charged for VAT liability?

Answer 28

If the VAT liability is paid within 16 and 30 days of the due date

Question 29

When is a 4% penalty charged for VAT liability?

Answer 29

Ff the VAT liability is paid later than 30 days of the due date.

Question 30

Wjen is the daily penalty at an annual rate of 4% charged at the beginning?

Answer 30

Charged after the initial 30-day period

Question 31

When must a business pay their quarterly VAT bills?

Answer 31

Large businesses with annual VAT liabilities first exceeding £2,300,000

Question 32

is the submission of return is at the end of the first month in the next quarter; the additional seven days are not available?

Answer 32

For large businesses

Question 33

When can a supplier leave the quarterly scheme?

Answer 33

If its most recent annual VAT liability falls below £1,800,000

Question 34

When can annual accounting scheme be joined?

Answer 34

The supplier must have reasonable grounds for believing that taxable supplies in the 12 months just beginning will not exceed £1,350,000.

Question 35

When can a supplier must leave annual accounting?

Answer 35

The supplier must leave the scheme if turnover in the current annual accounting period has exceeded £1,600,000

Question 36

Operation of the cash accounting scheme at start of beginning of any tax period?

Answer 36

It is reasonable to expect taxable supplies in the 12 months just beginning to not exceed £1,350,000. Clean VAT record

Question 37

What happens with output VAT in cash accounting?

Answer 37

Not payable until the customers have settled their invoices

Question 38

What happens with input VAT in cash accounting?

Answer 38

Not recoverable until suppliers have been paid

Question 39

When must a supplier leave the cash accounting scheme?

Answer 39

At the end of any period of 12 months in which turnover has exceeded £1,600,000

Question 40

When must a supplier leave the flat rate scheme?

Answer 40

If their VAT inclusive turnover, including exempt supplies, has exceeded £230,000 in the 12 months since the last anniversary of the date of joining the scheme or is expected to exceed £230,000 in the next 30 days

Question 41

When can a supplier join the flat rate scheme?

Answer 41

Provided the expected VAT exclusive turnover of taxable supplies for the next 12 months will not exceed £150,000. The business must have committed no VAT offences in the previous 12 months.

Question 42

What can flat rate scheme be used?

Answer 42

In association with annual accounting schemes, but not cash accounting scheme

Question 43

Relief for input tax in flat rate scheme?

Answer 43

No relief is given for input VAT suffered

Question 44

Where a gift of goods or services is made for non-business or personal reasons

Answer 44

Supply is a taxable supply unless it's a free sample or doesn't exceed £50 per person

Question 45

Where goods and business services are removed from the business for personal use and a taxable supply arises, what happens with output VAT for goods?

Answer 45

The tax value is the cost of the (replacement) goods (except fuel for cars

Question 46

Where goods and business services are removed from the business for personal use and a taxable supply arises, what happens with output VAT for business services?

Answer 46

The tax value is the cost of the service to the business

Question 47

What can voluntary registration avoid?

Answer 47

Avoid penalties for late registration

Question 48

Tax poijnt for the cash accounting scheme?

Answer 48

When payment is received

Question 49

Is total cost of petrol for the car of a director output or input VAT?

Answer 49

Input VAT

Question 50

Flat rate scheme calculation for standard rated sales of £30000?

Answer 50

£30000 * 15% * 120%

Question 51

Where are impairment losses included?

Answer 51

In input VAT

Question 52

When an invoice is issued for £1,000 + VAT. A 2% discount is offered for payment within 30 days

Answer 52

The VAT is £196 (£1,000 × 98% × 20%) if the customer pays within this time, but will otherwise be £200

Question 53

What happens with output VAT - input VAT?

Answer 53

Is paid to or repaid by HMRC

Question 54

is sales output or input VAT?

Answer 54

Output

Question 55

is materials/purchases output or input VAT?

Answer 55

Input

Question 56

Grey Ltd exported goods of £15,000 to a customer outside the UK (Input or output VAT)?

Answer 56

Input

Question 57

Advantage of cash accounting scheme (cash flow benefit)

Answer 57

As VAT on sales will arise two months later

Question 58

Advantage of annual accounting scheme (overtime)

Answer 58

Save overtime costs incurred in meeting filing requirements

Question 59

When a business pays for fuel costs for an employee and there is some private use of the vehicle (VAT charge)

Answer 59

VAT charge will be payable even where the full cost of the private fuel is reimbursed by the employee, with output VAT being payable on the reimbursed fuel

Question 60

When a business pays for fuel costs for an employee and there is some private use of the vehicle (VAT charge)

Answer 60

A VAT charge will be payable if the employee does not reimburse the employer, with output VAT being due based on a prescribed scale charge.

Question 61

Can input tax be recovered on UK customers?

Answer 61

No

Question 62

Can input tax be recovered on overseas customers?

Answer 62

Yes

Question 63

Charlie dispatched the goods on 19 May and issued an invoice for the full amount of £15,000 on 1 June. The balancing payment of £12,750 was received on 13 July. Identify amounts of output VAT for 31 August 2024?

Answer 63

£12750 * inclusive or exclusive percentage