VAT

Question 1

VAT calculations?

Answer 1

VAT calculations?

.VAT is always rounded down e.g. 20.333 = 20.33

Finding 20% on NET
. X 0.2 OR ÷ 5

Finding 20% on GROSS
. ÷ 6

Finding 5% VAT Already added
. x5 OR ÷ 105

Question 2

VAT OUTPUT AND INPUT?

Answer 2

VAT OUTPUT AND INPUT?

OUTPUT
.VAT ADDED TO NET SALES FOR CREDIT OR CASH, SALE
OF NON-CURRENT ASSETS, PURCHASE RETURNS (due to
HMRC) = CREDIT.
.Output tax higher than input tax = CREDIT ENTRY

INPUT VAT
.VAT added to net purchases and other items of
expenditure (due from HMRC) = DEBIT

Calculation
.Output VAT - Input VAT = amount due to/ from HMRC

Question 3

VAT and non-VAT registered?

Answer 3

VAT and non-VAT registered?

VAT registered
.They add VAT to their sales invoices and can reclaim any
VAT included in the items they have bought.

Non VAT registered
.Have to pay the VAT on your purchases but are unable to
reclaim it.

Question 4

VAT included and excluded?

Answer 4

VAT included and excluded?

LIST PRICE
.ADD VAT (does not include VAT for exams)

VAT @ 20%
.ADD VAT (means has not been added yet to (goods value)

PLUS VAT
.Add VAT

EXCLUDING VAT
.Add VAT

INCLUDING VAT
.VAT already added

NO VAT
.Means don’t add VAT

Question 5

Vat example?

Answer 5

Vat example?

.Goods £520.00, 5 percent trade discount, vat@ 20 percent. What is the net Value?

.Answer = vat hasn’t been added so just take 5 percent off of £520.00 which is £494.00.

Question 6

HMRC records?

Answer 6

HMRC records?

.HMRC requires you to keep records for 6 years of an Ltd business.

Question 7

VAT REFUND

Answer 7

VAT REFUND

.VAT REFUND IS MONEY OWED FROM HMRC = DEBIT
ENTRY.