VAT Flashcards
How is the tax point calculated for VAT purposes?
USUALLY - date goods/services delivered/dispatched BUT can be earlier IF:
In cases where the payment is made and the invoice is issued before the good or service is supplied, the tax point is the earlier of the payment or invoice date.
AND LATER IF:
BUT if VAT invoice is issued w/in 14 days from the basic tax point - provision of goods/services, then the new tax point will be the date of the invoice.
What is VAT NOT recoverable for?
VAT cannot be recovered on business entertaining, cars, or on any private proportion of other expenses.
What is the historic test for VAT registration?
A business with taxable supplies in the previous 12 months that exceed the VAT
registration threshold (£85,000).
HMRC must be notified within 30 days.
What is the future test for VAT registration?
A business that has reason to believe that it will make taxable supplies in the next 30
days that will exceed the VAT registration threshold (£85,000).
**HMRC must be notified BEFORE 30 days expire.
When may be business deregister for the purposes of VAT?
A VAT registered business may deregister for VAT if
- it anticipates that its taxable supplies over the next 12 months will fall below £83,000
- it stops trading/supplying goods and services - MUST deregister w/in 30 days
In what circumstances can a property owner who has opted to charge VAT on commercial property revoke VAT?
- It can be revoked within six months of the option if the option has not been put into practice.
- It can be revoked after 20 years, with the consent of HMRC.
What is the tax point?
The time of supply -
It determines the accounting period within which a supply of goods or services falls.
Define input v output VAT
Input VAT - VAT paid by company on goods and services
Output VAT - VAT charged by company on their goods and services.
How do you calculate VAT owed to HMRC? And are rebates available?
Output VAT - Input VAT
**NB can get rebate if input VAT exceeds output VAT
Can zero-rated suppliers reclaim input tax?
Yes - BUT not applicable for exempt suppliers.
**NK does not understand how this works!
What CAN and CAN’T you reclaim VAT for?
CAN:
- Property purchased for the business (or prop of business use)
CANT
- Car
- entertaining
- personal use
What is the maximum penalty that HMRC could impose for late VAT payments?
15%
On the sale of commercial buildings, when does standard rate apply?
Commercial buildings that are less than three years old are a standard-rated supply and therefore VAT of 20% will be suffered on the purchase of these.
Commercial buildings that are more than three years old (with no option to tax) and residential properties are exempt supplies and therefore no VAT will be suffered
