Chapter 6

Question 1

What is the tax period for VAT?

Answer 1

Three months or one month for taxpayers who choose to make monthly returns

Question 2

Does a taxpayer have to confirm that the information on the VAT return is correct?

Answer 2

Yes, and the digitally submit the Vat return to HMRC

Question 3

When most the taxpayers submit the return

Answer 3

Within one month and seven days from the end of the tax period

Question 4

When must the taxpayer pay HMRC?

Answer 4

At the same time as submitting it unless a direct arrangement exists

Question 5

What happens when submitting VAT if a VAT repayment is due from HMRC?

Answer 5

The VAT return will still be completed and submitted at the same time deadlines in order to be able to reclaim the amount due

Question 6

What does a VAT return look like?

Answer 6

The online VAT return compromises nine boxes of information. The info shows the output and input fee overall VAT liability together with information about sales and purchases.

Question 7

What can the taxpayer print on the electronic submission has been successfully completed?

Answer 7

A copy VAT return for their records

Question 8

Why will businesses not complete the actual VAT return?

Answer 8

Because returns are completed using MTD

Question 9

What do the nine boxes on the tax return consist of? 

Answer 9

Boxes 1-3 are actual VAT amounts
Boxes three and five are subtotal
Boxes 6 to 9 are totals of input and outputs


Question 10

Which box in the tax return of the supply of goods between EU member state involving Northern Ireland

Answer 10

28 and nine

Question 11

Where is the main source of information for the VAT return?

Answer 11

The VAT control account

Question 12

What is the VAT controller account?

Answer 12

I record that must be maintained by the trader to show the amount of VAT that is due to and from HMRC at the end of each quarter

Question 13

Got to the VAT control account provide

Answer 13

A link between the VAT return entries and the underlying business records

Question 14

How can we assure that the figures on the VAT return are extracted correctly?

Answer 14

Using MTD compatible software’s

Question 15

What should the balance on the VAT control account agreed with?

Answer 15

The balance of VAT payable/reclaimable on the VAT return

Question 16

What are possible reasons for the underlying records and the VAT return not reconciling?

Answer 16

Incorrect transfer of data or incorrect setup of accounting software

Question 17

What is incorrect transfer of data?

Answer 17

If a business uses bridging software to submit VAT returns, it is possible that is an error is made when transferring data from any manual records onto an electronic format

Question 18

What is incorrect setup of accounting software?

Answer 18

It is important that the software is set up for any special schemes such as flat rate scheme cash accounting scheme annual scheme failure to do this would lead to an incorrect VAT return

Question 19

Boxes one to 4 of the draft VAT return can be completed from what?

Answer 19

From the information in the VAT account

Question 20

Boxes six and seven require figures from where

Answer 20

The total sales and purchases excluding VAT

Question 21

Where will the information be extracted from the VAT return?

Answer 21

 The original verified preferably audited ledger account totals purchased on the accounting records such as the sales day book and the purchasing day book 

Question 22

When a business spends money on UK customer entertaining and cars with some private use, can they recover input VAT?

Answer 22

No VAT on these items must not be included in the input VAT recoverable inbox four of the draft return

Question 23

What happens relating to 0 rated items in Box 4 on the draft vat return

Answer 23

They will not be included

Question 24

What is bad debt relief as an additional input tax?

Answer 24

When a supply invoice is a customer for an amount including VAT, the supplier must pay the vat if the customer then fails to pay the debt the suppliers position is that output tax has to be paid but never collected. Supplier can recover amount.

Question 25

How do you suppliers recover VAT on irrecoverable debts?

Answer 25

They cannot issue credit notes so they must make an adjustment through the VAT return

Question 26

The business can reclaim VAT already paid if

Answer 26

Output tax was paid on the original supply Six months was elapsed between the date payment was due and the date the VAT return and The debt has been written off as a bad debt in the account records The debt is between six months and four years and six months old The debt has not been sold to factoring company The business did not charge more than the selling price

Question 27

What happens if a business receives a repayment of the debt later but a reclaim for VAT has already been made?

Answer 27

Adjust the VAT relief claimed

Question 28

Is bad debt relief an income or an expense?

Answer 28

An expensive business and so the VAT in respect of the sale is treated as recoverable input VAT

Question 29

Where is that bad debt relief included on the VAT draft?

Answer 29

In draft four of the draft return along with the VAT on purchases

Question 30

When computing the VAT on the bed debt, what do you have to check carefully?

Answer 30

To identify if the amount of the bad deck given in question is VAT inclusive this is likely because the amount of the customer owes the amount that includes VAT

Question 31

How do you calculate the VAT for a VAT inclusive debt?

Answer 31

You should multiply the bad debt by 20÷120 for standard related items

Question 32

What does a question mean? If the question uses the term bad debt relief is to be claimed

Answer 32

It is the VAT to be claimed, which is given to you

Question 33

What claim can be made on the Cessation of a business?

Answer 33

A client could be made for relief on all outstanding debts up to the date of season 

Question 34

What happens to bad debt relief if a business is brought by another business?

Answer 34

The VAT registration of the target business is transferred to the acquiring business. It is possible to claim bad debt relief for bad debts on the target business.

Question 35

What is an export?

Answer 35

Good sold by UKVAT registered business to a customer in another country

Question 36

Who charges VAT on export?

Answer 36

Since the place supply is the country Weathers came from the UK supplier must charge UKVAT

Question 37

What tax is exports of taxable goods?

Answer 37

Always zero rated, even if they have had a different rate of VAT if they had been delivered to UK customer

Question 38

How are exports accounted for on the VAT return?

Answer 38

The same way as other zero rated sale

Question 39

What boxes would you fill out on the VAT return regarding export?

Answer 39

There’ll be no output tax to include VAT return box one however the value of export sale is included in the taxable supplies total VAT return Box 6

Question 40

What kind of UK business reclaim in regards to export?

Answer 40

Or UK input VAT that it sufferers on its own expenses or purchases attributable to the export business

Question 41

How can you prevent false claims about non-existent exports?

Answer 41

It is a condition for zero rating of any export supply. The documentary evidence of export is obtained and retained by the UK taxable business which did zero rate.

Question 42

What evidence can a business keep regarding exports?

Answer 42

Delivery at the identify goods to a non-UK address this may be different address from the final customers address as long as the evidence delivery is made 

Question 43

What are import?

Answer 43

Goods brought by UKVAT registered business from a supplier in another country

Question 44

What is customs duty?

Answer 44

When goods cross the UK border and enter the UK via the legal UK customs point to any airport seaport or channel tunnel

Question 45

What does the import have to pay?

Answer 45

A duty to equal to the same amount of VAT that would be payable if the same goods were purchased from a supplier in the UK

Question 46

Why do importers of goods have have to pay VAT?

Answer 46

To treat foreign goods for VAT in the same way as home produce goods and to collect the same VAT on them once they enter the country

Question 47

Where is import VAT reclaimed on the VAT form?

Answer 47

Reclaimed inbox 4 as recoverable input VAT and the value of goods on which import VAT was paid will be included in Box 7

Question 48

What is postponed accounting?

Answer 48

UKVAT registered businesses do not have to pay their own import VAT duties at the border but may ought to delay accounting for UK import VAT on business imports of goods until the next usual VAT return

Question 49

What’s included in box one relating to postponed accounting?

Answer 49

The UK business will account for liability to pay the import VAT within the VAT control account

Question 50

What is included in the total recoverable input for vat in box four regarding postponed accounting?

Answer 50

The same VAT can normally be reclaimed and full on the same VAT return the input VAT figure is also included in the VAT control account is recoverable VAT

Question 51

What is included in Box 7 regarding postponed accounting?

Answer 51

The value of imports of which import VAT is reclaimed is also included in box for for the total purchases and other input

Question 52

What is not included in Box 6 which usually is regarding postponed accounting

Answer 52

The total way of imports on which output VAT was accounted for inbox one is not included inbox six

Question 53

Regarding postponed accounting, why is the total value of imports included in box one not included in Box 6 

Answer 53

Book 6 is for totalling supplies both taxable supplies and teamed supplies. 

Question 54

It’s an import goods treated the same as UK supply

Answer 54

It is separately charged to UKVAT so no

Question 55

Why are the place of supply rules needed?

Answer 55

To decide whether there is a supply of goods or services involving the UK business and either a supply or customer outside the UK is treated as a supply occurring under the UKVAT system

Question 56

What happens for a supply of goods?

Answer 56

The place suppliers a country where goods come from

Question 57

What happens for a supply of services?

Answer 57

Business to business the place suppliers where the customer is based Business to consumer the place of supply is where the supplier is based

Question 58

Example of places of supply business to business

Answer 58

If a business UK receives any supply services from a non-UK supplier, the services are deemed to be supplied in the UK under the VAT system and liable for UKVAT If a UK business supply services to a non-UK business, the services are deemed to be supplied outside the UK and therefore outside the VAT system not liable for VAT

Question 59

Example of place of supply business to customer

Answer 59

The UK business supply services to an overseas customer and confine no evidence that the customer in the business the place applies UK and UKVAT must be applied by the seller and shown on the UK tax invoice. In fact the UK supplier treats this business to customer service sale for VAT as it would treat a UK buyer.

Question 60

Under the place of supply business to business supplies of services are treated as what?

Answer 60

A supply made in the country whether customer is based this means that from UK suppliers perspective the supply is treated as outside the scope of UKVAT. The supply will not have to account for any UK output tax but we still include the amount charged in book 6 and VAT return.

Question 61

Suppliers of services to a business customer are treated as what?

Answer 61

A supply made in the country where the suppliers based this means that from the UK’s prescriptive The is applied in the normal way just as if the supplies made in the UK 

Question 62

What is reverse charge?

Answer 62

Under the place supply rules B2B suppliers of services are treated as a supply made in the country where the customers based