Indirect tax
Indirect tax
Section 1
This section is about applying your knowledge of VAT and using reference material to make recommendations 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 later. Tick ONE box on EACH line.
Register now
Monitor and register later
A
A new business with an expected turnover of £6000 per month for the next 12 months.
B
An existing business with a total turnover of £66000 for the last 11 months. Sales for the next 30 days are not yet known.
C
An existing business with a total turnover of £6000 per month for the last 12 months.
(b) Choose ONE reason why a business making taxable supplies might choose to register for VAT voluntarily.
A Preparation of VAT returns would be optional.
B Customers would benefit by being able to claim back input VAT.
C The business would benefit by being able to claim back input VAT.
Task 1.2
(a) A sales invoice for taxable supplies is being processed. What will be the effect on VAT? Choose ONE answer.
A Input tax will increase.
B Input tax will decrease.
C Output tax will increase.
D Output tax will decrease.
(b) A business supplies goods that are a mixture of standard-rated and zero-rated. Which of the following statements is true? Choose ONE answer.
A All of the input VAT can be reclaimed.
B None of the input VAT can be reclaimed.
C All of the input VAT can be reclaimed providing certain (de minimus) conditions are met.
D Some of the input VAT can be reclaimed, in proportion to the different types of supply.
(c) A business raises a pro forma invoice and receives a payment in advance of making a supply. The pro forma invoice was dated 3 March X0. The payment was received on 10 March X0. The goods were supplied on 14 March X0 and the VAT invoice was raised on 17 March X0. What
Section 1
This section is about applying your knowledge of VAT and using reference material to make recommendations 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 later. Tick ONE box on EACH line.
Register now
Monitor and register later
A
A new business with an expected turnover of £6000 per month for the next 12 months.
B
An existing business with a total turnover of £66000 for the last 11 months. Sales for the next 30 days are not yet known.
C
An existing business with a total turnover of £6000 per month for the last 12 months.
(b) Choose ONE reason why a business making taxable supplies might choose to register for VAT voluntarily.
A Preparation of VAT returns would be optional.
B Customers would benefit by being able to claim back input VAT.
C The business would benefit by being able to claim back input VAT.
Task 1.2
(a) A sales invoice for taxable supplies is being processed. What will be the effect on VAT? Choose ONE answer.
A Input tax will increase.
B Input tax will decrease.
C Output tax will increase.
D Output tax will decrease.
(b) A business supplies goods that are a mixture of standard-rated and zero-rated. Which of the following statements is true? Choose ONE answer.
A All of the input VAT can be reclaimed.
B None of the input VAT can be reclaimed.
C All of the input VAT can be reclaimed providing certain (de minimus) conditions are met.
D Some of the input VAT can be reclaimed, in proportion to the different types of supply.
(c) A business raises a pro forma invoice and receives a payment in advance of making a supply. The pro forma invoice was dated 3 March X0. The payment was received on 10 March X0. The goods were supplied on 14 March X0 and the VAT invoice was raised on 17 March X0. What