Bits To Remember

Question 1

What is the latest date a tax payers must contact HMRC to obtain a self assessment return?

Answer 1

5th October
“By the 5th October following the end of the current tax year, in which a new source of income is aquired”

I.e. July 24 starts a new business, tax year 24/25 do must notify by 5th October 2025

Question 2

Who can complete a short return?

Answer 2

Employees
Pensioners
Traders with less than 90k turnover

Question 3

What are the statortoy retention periods?

Answer 3

For a business owner, records must be kept for 5 years following Jan 31st after the end of a tax year

I.e 24/25, 31 Jan 26 + 5ys = 31 Jan 31

A non business owner only is required to keep records for 1 year after 31 Jan after tax year end

Question 4

When can you ammend a self assessment return?

Answer 4

You can ammend for any reason within 12 months of returns DUE DATE (31st Jan following tax year end)

No extensions if you file late

Question 5

What is a sole traders first payment on account?

Answer 5

On Jan 31st during tax year.

50% of income tax (deducting what is paid at source) + class 4 NIC

(This could also include the remaining balance charge from the previous tax year as their 31 Jan after tax period is our current 31st Jan in tax period!)

Question 6

When must HMRC raise a discovery for someone who didnt fully disclose on their self assessment (not careless or deliberately(

Answer 6

They have 4 years after end of relevant tax year.

Question 7

What to do in a long answer corp question is they say “the following items have not yet been included in the accounts”

Answer 7

Deduct the allowable expenses

Put 0 for the disallowable expenses

Question 8

Donation to charity , sole trader

Answer 8

Local charities are allowable (expenses can be deducted if not added, or 0 is already included)

National charities are disallowed (expenses is added on if used in calculation, or 0 if not yet included)

Question 9

What is included in non-trade loan on a corporation tax computation?

Answer 9

Bank interest and employee loan interest are forms of non trade loan relationship income.

The interest payable on loans is a non trade loan relationship expense.

Non trade loan income is calculated as incomes - expenses

As corporations go on an accruals basis, interested owed at ye should be included here.

Question 10

Capital expenditure on corporation computation

Answer 10

Capital expenditure is not allowed/ it is disallowed.

We would either add this back on it is has been incorporated to get trading profit. If it has not yet been incorporated leave as 0.

Question 11

How to treat loan interest payable in corporation computation

Answer 11

Disallowable expense ?

Put in trading income workings as well as non-trading loans relationship equation

Question 12

How to treat exempt dividends in corporation computation

Answer 12

Remove dividends from trading income if already included as they are disallowable.

They also are 0 on top half of equation as exempt. These come into play only when calculating augmented profit.

Question 13

Tax evasion ans avoidance. What is legality

Answer 13

Evasion illegal
Avoidance legal

Question 14

Payment on accounts for a sole trader

Answer 14

31st Jan (in tax year)
31st July (post tax year)
31st Jan (post tax year balancing payment)

Remember a sole trader in their first year is not required to make payment on account payments.

Question 15

When to file VAT returns? When to pay VAT returns?

Answer 15

Must file and pay 1 month and 7 days after the filing.

I.e. filing for quater ending 31 march, must file and pay by 7th May

Question 16

What are tax quarters?

Answer 16

31 Jan
30 April
31 July
31 October

Question 17

When to use a balancing charge or allowance for capital gains tax after disposal.

Answer 17

A positive remainder results in a balancing allowance.
This can be claimed as an allowance for the year (make sure to pro rate)

A negative balance means a balancing charge, this gets deducted from this years allowances

Question 18

Dividend income allowance

Answer 18

500 at 0%

(This does count in the summing when doing the thresholds)

The rest has its own special dividend %

Question 19

How to treat cars owned by corporation in allowances calculations

Answer 19

Cars are always in a main pool (except 0 electric?)

Question 20

Who is a person for VAT puproses

Answer 20

A sole trader, partnership, limited company or charity.

If a sole trader owns multiple businesses they as a person have 1 VAT registration.

If they are part of a partnership, this is a 2nd VAT registrati9n that they are a party to.

Question 21

VAT reclaim on vehicles rules

Answer 21

VAT can be reclaimed on cars, vans and lorries.

But 0 VAT can be reclaimed on a car if even a little bit is used for private use.

Question 22

How is flat rate VAT scheme calculated

Answer 22

Turnover of business inclusive of vat x flat rate % given in question

Question 23

What monetary amount do you start with when calculating PAYE codes?

Answer 23

PAYE is about figuring out net allowances (and then sticking on correct letter based on tax codes).

Therefore start with personal allowance (and deduction benefits that aren’t included in payslip)

Question 25

Define taxable supply and taxable person

Answer 25

Taxable supply is any supply of goods or services made in UK other than an exempt supply or supply outside of UK scope Taxable person is a sole trader, partnership, club or association making taxable supplies VAT is charged on taxable supplies by a taxable person

Question 26

Quick, what's the difference between input VAT and output VAT

Answer 26

Output is on sales made to customers Input is on purchases and can be reclaimed Net VAT payable is output - input

Question 27

Exempt supplies versus others

Answer 27

Exempt you charge 0 and reclaim 0 VAT. Can't register for VAT with these. 0 rated you only charge 0 (can still reclaim though!) Reduced rate you charge 5 % Standard rate is 20%

Question 28

How to react to an error in charging VAT

Answer 28

Trader must always charge appropriate VAT If they made a mistake and didnt, they still need to give HMRC 1/6th of turnover!

Question 29

How to register for VAT

Answer 29

Must register online (penalties for late registration) Must register within 30 days (either within 30 days of end of month via historic test, or by end of day 30 starting on day 1 when trader finds out they will exceed 90k via future prospects)

Question 30

VAT historic test vs VAT future prospects test

Answer 30

These tell us when a business must register for VAT (Traders need not register if they only sell 0 rate goods) Historic tests are performed at the end of each month. If, looking back at the last 12 months, total taxable supplies exceeds 90k must notify and register within 30 days from the end of relevant month. (Day to notes always 30th of the month). Once registered must start charging VAT 1 month and 1 day later) If next 12 months expect less than deregistration limit of 88k then need not register. Future prospects tests are constantly considered. As soon as trader notices that in next 30 days total taxable supplies exceed 90k they have from that same day, 30 days to notify HMRC. It is on the first day they notice that they must immediately register and start charging VAT.

Question 31

What does taxable total supplies include?

Answer 31

All sales, including: VAT Exempt supplies Supplies outside the scope of VAT (e.g. wages) Sales of capital assets

Question 32

What are the annual registration limit and deregistration limit? How would they apply?

Answer 32

Annual registration limit is £90,000 (of total taxable supplies) Deregistration limit is £88,000 (of total taxable supplies) If you exceed annual registration limit you must notify HMRC and register as a VAT entity. However, you won't need to if you expect the next 12 months to fall under the deregistration limit.

Question 33

What are the responsibilities of a taxable person?

Answer 33

- must charge output tax appropriately - must quote traders allocated VAT registration number on all sales invoices - file a VAT return for their allocated tax period (normally every 3 months) - maintain VAT records for 6 years

Question 34

Voluntary vs compulsory deregistration for VAT

Answer 34

Compulsory - when ceasing to make taxable supplies - must notify HMRC within 30 days of realising business will no longer make taxable supplies - deregistration effective on date taxable supplies cease Voluntary -can do if evidence that taxable supplies <88k in nect 12 months - deregistration effective from date of request or agreed later date Upon deregistration... Calculate final output tax based on value of fixed assets and inventory still held (HMRC reclaiming the VAT they gave out when first bought) But this is waved if output is <1k or equal to

Question 35

What does VAT tax point do

Answer 35

The VAT period a transaction falls into is determined by the tax point The tax point determines which day in a period we consider a transaction to have occurred (only for VAT purposes, not general accounting purposes)

Question 36

How to calculate tax point

Answer 36

Basically tax point is almost always the earliest date you are given. The only exception is if invoice happens within 14 days of delivery note, if thats the case go with the kater invoice date. Also, deposits have their own tax point, seperate from the remainder of payment

Question 37

What is included in output vat calculation

Answer 37

Standard rate 20% sales Reduced rate 5% sakes Goods taken for own use Gifts of goods (excludes gifts of services, trade samples or total gifts to a person less than£50) Discounted sales Private fuel for employees (1/6 of tax table goes to VAT)

Question 38

What is included in input vat calculation

Answer 38

Standard rate expenditure 20% Reduced rate expenditure 5% Recovery of output VAT previously paid on bad debts For reclaiming vat on bad debts (we sold something, paid output tax, but never got paid) we can reclaim in debt is overdue by 6months+ and its already been written off in books

Question 39

Recovering VAT from preregistration

Answer 39

VAT incurred before registration... For goods can reclaim if bought for business purposes within the last 4 years and are still in use/inventory For services they must have been for business purposes in the last 6 months

Question 40

Examples of irrecoverable input VAT

Answer 40

Cars (unless 100% for business purposes) Non business items When non VAT receipt is held Entertaining (except for staff or foreign customers)

Question 41

When are quarterly VAT payments and returns due?

Answer 41

Date for return (VAT100 form) and payment are the same. They are 1 month and 7 days after end of the quater (if direct debit is set up then its automatically take 1 month and 10 days after)

Question 42

Who must make vat payment on accounts? What are these payments?

Answer 42

Substantial traders with VAT liability exceeding 2.3 million per year VAT quaters start Jan 1, so end March 31, June 30th, September 31 and December 31 The 2nd and 3rd month end per quater you pay 1/24 the annual liability for previous year. The remaining balance for the quater is paid 1 month after the end of the quater. (Not 1 month and 7 days!)

Question 43

Difference between annual accounting scheme and cash accounting scheme

Answer 43

Annual accounting scheme means you pay either 3 or 9 times in the year (plus a final balancing payment) but only file a return once. Cash accounting scheme means vat is recorded at time of payment rather that invoice date/tax point. Benefits those who sell in credit.