VAT + Stamp Duty

Question 1

What is the criteria to be part of a VAT group?

Answer 1

50%+ common control between companies.

Question 2

Advantages and disadvantages of being part of a VAT group?

Answer 2

Advantages:
- No VAT charged on intercompany transactions
- Only one VAT return needed

Disadvantages:
- All companies are jointly liable to pay the VAT
- Bringing in a partially exempt company would restrict VAT recoverable
- Wholly zero rated companies would benefit from doing their own VAT returns to claim regular refunds

Question 3

Treatment of capital items in partial exemption test?

Answer 3

Exclude capital items from partial exemption tests

Question 4

What VAT is recoverable if a partial exemption test is passed? What if tests are failed?

Answer 4

Passed = all VAT is recoverable (including input VAT on exempt supplies)

Failed = VAT on taxable supplies is claimable + % of VAT on un-attributable supplies

Question 5

How to calculate % of VAT on un-attributable supplies if tests passed? Do what with % calculated?

Answer 5

Taxable turnover (excl. VAT) / Total turnover (excl. VAT) x 100%

Round UP to nearest whole %

NOT INCLUDING SALE OF EQUIPMENT

Question 6

What properties have VAT charged / reclaimable on them?

Answer 6

1) New commercial properties built within previous 3 years

2) Properties with option to tax (can claim VAT if decided to take option to tax)

Question 7

VAT on any residential properties and land before option to tax?

Answer 7

Residential properties - Zero rated

Land - Exempt

Question 8

How to calculate capital goods scheme? At purchase, annual adjustment and disposal.

Answer 8

VAT reclaimed on purchase:
input VAT x taxable use %

Annual adjustment:
Adjustment period % x total input VAT x change in taxable use %
(You only make adjustment if taxable use changes)

(Adjustment periods found in Hardman’s. E.g. properties are 10 years so 10%)

Disposal:
1) Normal annual adjustment
2) Annual adjustment % remaining x total input VAT x (R - original taxable use %)

R= 100% if sale was taxable, 0% if exempt.

(Total years remaining is how many VAT years left)

Question 9

VAT treatment of goods imported and exported? What about to/from NI?

Answer 9

Imported - postponed VAT (reverse charge on following return or when goods are imported)

Exported - Zero rated (if proof of export)

NI - treated as normal

Question 10

VAT treatment of services to/from abroad?

Answer 10

Paying for services - reverse charge

Selling services - outside the scope of VAT

Question 11

Stamp duty land tax for first time buyers?

Answer 11

No stamp duty for first £425,000. 5% after that.

Question 12

Difference between stamp duty and stamp duty reserve tax?

Answer 12

Stamp duty reserve tax is on paperless transactions.

No rounding on stamp duty unlike regular stamp duty.

Question 13

What value is stamp duty land tax calculated on?

Answer 13

Amount including VAT

Question 14

What to do with stamp duty figure calculated?

Answer 14

Round up to nearest £5 (just for regular stamp duty)

Question 15

If a property is given to a relative, what is the value stamp duty land tax calculated on if:
They paid under the value?
They transferred their mortgage?

Answer 15

Paid under value - stamp duty is calculated on value of property

Transferred mortgage - stamp duty is calculated on value of mortgage

Question 16

Order of tax points?

Answer 16

What ever happens first:
- When goods are delivered/services completed
- Invoice raised (becomes tax point if invoice raised within 14 days after goods delivered)
- Payment

Question 17

VAT payable on commercial property (older than 3 years) if:
Option tax applied?
No option to tax applied?

Answer 17

Option to tax - 20%
No option to tax - 0%