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Chapter 23 - Value added tax - Coggle Diagram
Chapter 23 - Value added tax
Registration
Required if at the end of any months taxable supplies exceed 85,000 or in the next 30 days, taxable supplies expect to exceed 85,000
30 days to notify HMRC
Registered effective when: End of month following the end of 12 month period (historic test) or start 30 day period (future test)
Input tax not recoverable on: cars (unless motor trade), UK customer entertaining, non-business purchase
Pre-reg expense: input tax recoverable for
Fix assets bought 4 yrs prior to reg but use in post-reg
Services supplied within 6 months
Purchase still held as inventory
Transfer of going concern: When the whole business is transfer, it is out of scope of VAT, so no VAT chargeable
Conditions: Purchasers also VAT reg, same kind of business carried on, no significant break in trading
Administration of VAT
VAT period
Quarterly: Usually
Monthly: repayment trader
Annual: optional if taxable supplies =<1,350,000
Submission and payment: + 1 month 7 days after the end of VAT period
Substantial trader
Annual liability >2,300,000 must make monthly payment
1/24 of the previous year liability
Made at end of month 2 and 3 of quarter
Balancing payment one month after the end of the quarter
Tax point
Basic tax point is when goods available or service completed
If payment received earlier than the basic tax point, then tax point is the time payment received
If the earlier rules does not apply and invoice issued 14 days after goods available, then invoice date is tax date
Impairment losses (bad debt): Trader can claim refund of VAT if: invoice unpaid 6 months from due date