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VAT - ATX (Capital goods scheme (CGS) (Assets covered by scheme (Land and…
VAT - ATX
Capital goods scheme (CGS)
Assets covered by scheme
Land and Building costing £250,000 or more - adjusted over 10 years
Computers, aircrafts, ships costing £50,000 or more - adjusted over five years
Annual Adjustment
Total input tax/10/5 years × % now less % in the original year
Adjustment is made if proportion of exempt supplies changes
Disposal
during adjustment period
Nomal adjustment, Plus
Further adjustment
Exempt supplies
0% taxable use for the remainder of adjustment period
Taxable supplies
100% taxable use for the remainder of adjustment period100% taxable use for the remainder of adjustment period
Land & Buildings
Types of supply
Zero-rated
Residential buildings
(Freehold/ lease > 21y )
Charitable buildings (Freehold/ lease > 21y)
Standard rated
Freehold new commercial building (Sold within 3 years)
Exempt
Other sales
Unless exemption is waived (Opting to Tax)
Conditions
election within 30 years of signing
Can be withdrawn in first 6 months or after 20 years
Election cannot be made for part of building
Impact
Supply becomes a taxable supply
Input tax can be recovered
Future supplies at standard rate
New owner is not bound by previous election
Recoverable Input VAT
Overheads-
PARTIAL EXEMPTION
Apportionment
(some part is recoverable)
Step 1
Taxable supplies/ total supplies (excl. VAT & capital goods)
Step 2
Roundup to nearest whole %
(unless residual input VAT is more than £ 400,000)
Step 3
Multiply % by non-attributable input tax
Annual Adjustment
If uses quarterly method, retest amount of recoverable VAT on Overheads for whole year
Input tax in last return period in year or 1st period in next will be adjusted
De minimis limits
Test 2, OR
Total input VAT
less
Input VAT directly attributable to taxable supplies ≤ 625 per month
AND
exempt supplies 50% of all supplies
Test 1, OR
Total input VAT ≤ 625 per month AND exempt supplies ≤ 50% of all supplies
Normal Test
Input VAT attributable to exempt supplies (direct and residual) ≤ 625 per month
AND
≤ 50% of all input tax
Business can apply de minimis limit once a year if:
Annual Test
Mut have been de minimis in previous year, applies annual test throughout year, input tax likely to be ≤ £1m in current year
Trader test de minimis limits at end of year and adjusts for input tax not recoverable
Trader recovers all input tax during tax year
All input tax is recovered if business is below de minimis limit
Exempt supplis
Wholly irrecoverable/disallowed
(unless it is below de minimis limit)
Taxable supplies
Wholly recoverable/available for credit