tax (week 7) Flashcards
(28 cards)
what is VAT charged on?
any supply of goods or services made in the UK
where it is a taxable supply
made by a taxable person
in the course of any business carried on by that person
what does in the course of business carried on by them mean for VAT purposes?
wide meaning and basically means any economic activity carried on, on a regular basis
what is the current registration threshold for VAT?
£90,000
When is a person required to register VAT at HMRC? (Timeframe)
either within 30 days of the end of that month or if they believe they will go over the threshold then in a period of 30 days
what is corporation tax payable on?
all income profits
chargeable gains
a body corporate that arise in its accounting period
what is TPP (taxable total profits chargeable to corporate tax) what two things make this up?
company’s income profit and chargeable gains
how much corporation tax is payable on companies with a TPP greater than £250,000?
25%
how much corporation tax is payable on companies with a TPP of £50,000 or less?
19%
how much corporation tax is payable on companies with a TPP is between £50,000 - £250,000?
company may claim marginal relief which has a tapering effect on the tax rate.
when do income receipts and expenditure arise?
through every day trading
when do capital receipts and expenditure arise?
through one-off transactions
is dividend income included in calculating a company’s TPP for tax purposes?
no generally exempt
what does it mean ‘tax deductible expenditure’?
expenditure by the company that the company is permitted to deduct from its income receipts, thereby reducing the overall tax bill
to be deductible for tax purposes what are the 3 things the expenditure must be?
- be ‘wholly and exclusively’ incurred by the purposes of the trade
- not be prohibited by statute
- be of an income nature
what is a corporate interest restriction?
where a company (or group of companies) has more than £2millon of net interest in the UK any year, the amount of interest a company may deduct is restricted to maximum amount equal to 30% of its income receipts
what is the reducing balance basis?
the idea that companies can deduct 18% of the value of plant and machinery from their income receipts each year on a ‘reducing balance’ basis.
what is annual capital allowance?
enables companies to deduct 100% of expenditure on new, used or refurbished plant and machinery up to £1million.
(anything over this they can then use the reducing balance basis 18%)
What is rollover relief for replacement of business assets (rollover relief)?
defer tax from a gain when an asset is disposed of
do you need to replace an asset with the same type of asset for rollover relief to apply?
no it doesnt need to be the same type of asset - as long as it is a qualifying asset
what is the effect of rollover relief?
tax is postponed until the replacement asset is sold and no new qualifying replacement asset is purchased.
what qualifying assets attract rollover relief?
land and buildings
goodwill
fixed plant and machinery
ships and hovercrafts
aircrafts
Lloyd’s syndicate capacity
what are the timings for rollover relief? (between replacement asset and new asset)
replacement asset must be purchased within 12 months before or 3 years after the sale of the old asset
what is straddling?
when a company’s account year and financial year is different - the TPP of the accounting year must be split between the financial years that it goes over (because different financial years have different tax rates)
what is the procedure for companies with TTP of less than £1.5million for paying HMRC?
pays HMRC within 9 months and 1 day of the end of the accounting period
company must electronically tax return within 12months of the end of the accounting period it relates to
