Indirect taxes

 Indirect tax Essay

Indirect tax

Section 1

This section is about applying your knowledge of VAT and using material for consultation to make tips or decisions.

Task 1 . 1

(a)You have the following information about the taxable supplies of 4 businesses. For each of them, indicate whether they need to register for VAT immediately, or monitor turnover and register after. Tick 1 box on EACH line.

Register now

Monitor and register afterwards


A new business with an expected yield of £6000 per month for 12 months.


An existing organization with a total turnover of £66000 for the last 11 several weeks. Sales for 30 days are certainly not yet noted.


An existing business using a total yield of £6000 per month for the last 12 months.

(b)Choose ONE reason a business producing taxable supplies might choose to register for VAT voluntarily.

APreparation of VAT returns can be optional.

BCustomers would benefit by being capable of claim backside input VALUE-ADDED TAX. CThe organization would advantage by being capable of claim back input VALUE-ADDED TAX.

Task 1 . 2

(a)A sales account for taxable supplies will be processed. What is going to be the result on VAT? Choose ONE answer.

AInput duty will increase.

BInput tax will certainly decrease.

COutput tax increases.

DOutput tax will lower.

(b)A organization supplies products that are an assortment of standard-rated and zero-rated. Which will of the following statements is valid? Choose ONE answer.

AAll from the input VALUE-ADDED TAX can be gotten back.

BNone from the input VALUE-ADDED TAX can be gotten back.

CAll from the input VALUE-ADDED TAX can be reclaimed providing specific (de minimus) conditions happen to be met. DSome of the suggestions VAT may be reclaimed, equal in porportion to the several types of supply.

(c)A business elevates a pro maneira invoice and receives a payment prior to making a supply. The pro manera invoice was dated 3 March X0. The repayment was received on 15 March X0. The goods were supplied upon 14 Drive X0 as well as the VAT bill was raised in 17 03 X0. Precisely what is the taxes point? Select one answer.

A3 March X0

B10 Mar X0

C14 March X0

D17 Mar X0

Process 1 . three or more

A selling business that receives most of its sales in funds and acquires most of it is purchases about credit posseses an estimated proceeds for the next 12 months of £760000.

(a)What may be the turnover limit for eligibility to join the amount accounting scheme? Choose ONE solution.

AEstimated turnover in the next twelve months not more than £1350000. BEstimated turnover in the next 12 months not more than £1600000.

(b)Is the business eligible to become a member of the cash accounting scheme? Select one answer.



(c)Would the cash accounting scheme increase the cash flow of this business? Choose ONE answer.

AYes, because they will be able to reclaim input VAT earlier. BYes, because they will pay end result VAT later on.

CNo, mainly because they would claim back input VAT later.

DNo, because they will pay outcome VAT previous.

Task 1 . 4

(a)You have the subsequent extract via a production business's funds payments over the last month. Select either Yes or No inside the right-hand container to show perhaps the input VAT can be reclaimed on the following VAT go back.


£ net


£ Total

Reclaim insight VAT?

Business office supplies

one hundred and fifty. 00

dua puluh enam. 25

176. 25

Yes / No

Purchase of company car

9500. 00

1662. 50

11162. 50

Yes / Simply no


450. 00

80. 75

528. 75

Certainly / Not any

Business entertainment

130. 00

22. seventy five

152. 75

Yes as well as No

(b)You discover that a purchase invoice has been entered within a business's information twice so the VAT have been reclaimed two times for the quarter finished 31 January X0. The number of VAT is £185. 80 and you are gonna prepare the VAT returning for the quarter concluded 31 Drive X1. This 6 determine on the last VAT return was £180000. What action should you take? Choose ONE answer.

AIgnore the error since it is less than 1% of the Package 6 determine for the quarter concluded 31 December X0. BAdd £185. 85 to the Field 4 figure for the VAT go back for the quarter ended 31...