VAT (Groups & Property Transactions) Flashcards
(24 cards)
conditions for VAT groups?
two or more companies are eligible to form a VAT group as long as:
- one company has control
- both companies are under common control
can a non-corporate entity (sole trader / partnership) be included in a VAT group?
yes
can be included within a VAT group comprising UK companies that it controls (>50%)
to be part of a VAT group…
the companies/unincorporated entities must be established
who is responsible for accounting for all input/output VAT for a group?
VAT group appoints a representative member who’s responsible for accounting for all input & output VAT for the whole group
does a VAT group submit a single VAT return or multiple?
single
are all VAT group members jointly liable for VAT payable by the whole group?
yes
how are intra-group supplies treated for VAT purposes?
outside the scope of VAT
what happens if a group is partially exempt?
the de minimis tests are applied to the group totals
is group registration optional or compulsory?
optional
therefore, not all eligible entities have to be included in the VAT group
which entities can be left out of a VAT group registration?
- zero rated entities (to retain cash flow advantages of monthly returns)
- entities making wholly exempt supplies (since their inclusion will impact partial exemption status for the whole group)
input VAT relates to…
output VAT relates to…
input = purchases
output = sales
how do you calculate VAT repayable if VAT inclusive/exclusive amount is given?
inclusive = divide by 6
exclusive = divide by 5
classification of supplies for property transactions?
exempt
zero rated
standard rated
what is exempt in relation to property transactions?
- lease of any building
- sale of old commercial buildings (less than 3yrs old)
- sale of existing residential building
what is zero-rated in relation to property transactions?
- construction and sale of new residential building
- sale of new residential accommodation following conversion of a non-residential building by the vendor
what is standard-rated in relation to property transactions?
- construction of commercial building
- sale of new (less than 3yrs old) commercial building
‘option to tax’ in relation to property transactions?
the owner of a commercial building can opt to waive the exemption from VAT so that input tax relating to the supply can be recovered
what happens if one opts to tax their commercial building?
VAT must be charged on:
- lease of the building (rents & lease premiums)
- sale of building within 20yrs of the OTT (OTT is irrecoverable for 20yrs, after 6 month cooling off period)
OTT?
option to tax
how is input tax treated when one opts to tax their commercial property?
input tax can be recovered, since OTT makes the rental/sale of the building a taxable supply
the election relating to OTT is made…
- on individual buildings
- by an individual party and is non-transferrable
OTT applies to what?
supply OF the building
not supplies made FROM the building
if the building is used to make exempt supplies (e.g., insurance) the VAT status of these doesn’t change
is banking exempt or taxable?
yes
when can you reclaim VAT on rent?
when VAT is charged on the rent and they OTT the building (if not taxable already)
