Term
| What is the general principle of VAT? |
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Definition
| VAT is charged on taxable supplies of goods and services made in the UK by a taxable person of business carried by him. |
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Term
| What is a taxable supply? |
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Definition
| A taxable supply is a supply of goods and services made in the UK, other than an exempt supply. |
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Term
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Definition
| Gifts of goods are normally treated as sales at cost. However business gifts are not supplies of goods if the total cost of gifts made to the same person does not exceed £50 in any 12 month period. |
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Term
| Who are considered Taxable persons? |
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Definition
| Includes individuals, partnerships, companies, clubs, associations and charities. If a persons taxable turnover exceeds £83,000 (registration limit) then they are a taxable person and should register for VAT. |
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Term
| What is the registration limit? |
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Definition
| £83,000 in any period up to 12 months or reason to believe it will exceed this amount in 30 days. |
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Term
| What is disregarded when determining a persons taxable supplies? |
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Definition
| Supplies of goods and services that are capital assets of the business are to be disregarded. |
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Term
| What are the requirements for voluntary registration? |
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Definition
| A person may decide to become registered even though their taxable turnover falls below the registration limit. |
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Term
| What are exempt supplies? |
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Definition
| Exempt supplies are goods and services which are not liable for VAT and which fall into one of 16 groups. |
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Term
| List 10 groups of exempt supplies |
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Definition
1. Insurance
2.Public Postal servicess provided by the Royal Mail
3. Betting,gaming and lotteries
4. Financial services (e.g bank charges and stockbroking)
5. Education provided by schools, universities and further education colleges
6.Health and welfare services
7.Cultural services
8.Certain fund-raising events held by charities
9.Burial and cremation services
10.Investment Gold |
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Term
| What are the two implications of a person who produces exempt supplies? |
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Definition
1. VAT cannot be charged
2. They cannot register for VAT charges no output tax and cannot reclaim input tax. |
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Term
| What are reduced rate supplies? |
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Definition
| A supply of goods or services charged to VAT at a rate of 5% |
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Term
| List 10 groups of reduced rate supplies |
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Definition
1. Fuel and Power supplied for domestic or charity use
2.Women's sanitary products
3.Children's car seats and car seat bases
4.Contraceptive Products
5.Certain welfare advice or information
6. Installation of mobility aids for the elderly
7. Smoking cessation products
8. Static holiday Caravans
9.Installation of energy-saving materials in residential accommodation
10.Grant -funded installation of heating or security equipment. |
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Term
| What are zero rate supplies? |
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Definition
| A supply of goods or services charged to VAT at 0% |
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Term
| List 10 groups of zero-rate supplies |
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Definition
1. Food
2. Water and sewerage services unless supplied for industrial use
3. Books, newspapers and journals
4.Bank notes
5.Exports
6.Children's clothing and footwear and protective boots and helmets.
7.Certain categories of international services
8. Houseboats and static residential caravans
9. Gold supplied by a central bank to another central bank
10. The dispensing of drugs and certain aids for disabled persons. |
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Term
| What is a partial exemption? |
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Definition
| A taxable person who makes partly taxable and partly exempt supplies who may reclaim part of the input tax suffered. |
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Term
| Who is VAT administered by? |
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Definition
| VAT is administered by HMRC and the tax tribunal hears appeals. |
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Term
| Whats the responsibility of the local offices? |
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Definition
| Local offices are responsible for the local administration of VAT and providing advice to registered persons. |
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Term
| What are the penalties involved in a default surcharge? |
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Definition
| A default occurs when a trader either submits his VAT return late or submits the return on time but pays the VAT late. |
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