VAT Flashcards
(31 cards)
What is VAT?
VAT is an indirect tax charged on the selling prices of the taxable goods
How many VAT rates are there?
5
What are the different VAT rates?
Standard rate
Reduced rate
Zero rate
Exempt
Outside the scoop
What rate is 20%?
A standard rate
What rate is 5%?
Reduced rate
What are the three types of 0% VAT rate?
Zero rate, exempt, outside the scoop
What is the taxable turnover for VAT?
£85k
When is a business required to register for VAT?
When they turnover £85k
When does the business charge VAT on goods?
When they earn a turnover of £85k
List items of the zero - rated items?
Childrens clothes, basic foods and books
List of exempt items?
Postage, health services and insurance
List of ‘outside the scoop’
Wages and salaries
List of reduced rates?
Domestic heat, light, and children’s car seats
Where does that VAT go that’s charged by the business?
VAT is due to be paid to HMRC
Can the business reclaim VAT?
Yes
What does the business pay VAT ON?
Sales
What do business reclaim VAT on?
Purchases
What happens if a business have more VAT on sales, than purchases?
They will owe VAT to HMRC
What happens if a businesses purchase VAT is higher than their sales?
A refund will be due back from HMRC
What must a business do when they are registered from VAT?
They just show the VAT reg number of all business documents
How is VAT calculated?
As a percentage of the value of goods or services sold
What should the VAT number be displayed?
On all invoices and credit notes
What is the tax code for standard rate?
T1
What is the tax code for reduced rate?
T5
