Chapter 25

Surcharge Period 2019 2020

Late Late Late
Jan,Feb, Mar Jul,Aug,Sep Apr,May,Jun Jul,Aug,Sep

surcharge period => 12 month

1. extend
2. penalty = 2% 1. extend
2. penalty = 5%

Outside EU Within EU
Import - subject to VAT Acquisition
HMRC - Output VAT =>at the point of entry to UK
Input VAT recovered => next VAT return

Export - zero rated supply Despatches

Special Scheme
Normal Scheme 3. Flat Rate Scheme
- Tax Point => VAT return period - Tax Point => VAT return period
- Return period => 3 months - Return period => 3 months
- Summission => VAT Return and payment => Due date 1 month + 7 days - Summission => VAT Return and

Input VAT recovered // Output VAT charges Calculation

VAT paid to HMRC VAT paid to HMRC = Tax inclusive
VAT claim from HMRC
Input VAT cannot recovered.

Tax Inclusive Total Turnover = Sta

Threshold
Turnover < or equal 150,000 => Jo
VAT inclusive Turnover > 230,000

VAT inclusive threshold

1. 250
2. 25
3. 230000
Example 1
Late Late Late
Oct,Nov,Dec Jul,Aug,Sep Jan,Feb,Mar
2017 2018 2019
surcharge period

1. extend
2. penalty = 2% x 12000 240
no need to pay penalty
1. extend
2. penalty = 5% x 500
no need to pay penalty

Example 2

Under Normal scheme

Output VAT charge
- Business client = 70000x* 20% 14000
- individuals = 18000 x 20/120 3000
- financial service => exempt 0 17000

Input VAT recovered

- expenses = 4800 x 20/120 -800
Paid to HMRC 16200

Under Flat rate scheme

VAT paid to HMRC = Tax inclusive Total Turnover x Flat rate %
= 104000 x 14.5%
15080

Tax inclusive total turnover = Std rated + zero rated + exempt

= 84000 + 18000 + 2000
104000

Input VAT cannot be recovered.

Brian should register Flat Rate scheme.

 2021
late late Late
Jul,Aug,Sep Oct,Nov,Dec Jan,Feb,Mar Apr,May,Jun

surcharge period

1. extend
2. penalty = 2%
penalty = 5%

1. extend End
2. penalty = 10%

- subject to VAT
Output VAT charge
Input VAT recovered

- zero rated supply

ecial Scheme
Flat Rate Scheme 1. Cash Accounting scheme
ax Point => VAT return period - Received and Paid => VAT return period
eturn period => 3 months - Return period => 3 months
ummission => VAT Return and payment => Due date 1 month + 7 days - Summission => VAT Return and payment =

Threshold
T paid to HMRC = Tax inclusive Total Turnover x Flat rate % Next 12 months < or equal 1,350,000 => Join
Previous 12 months > 1,600,000 => leave
ut VAT cannot recovered.

x Inclusive Total Turnover = Standard Rated Supply + Zero Rated Supply + Exempt supply

nover < or equal 150,000 => Join

T inclusive Turnover > 230,000 => Leave
 Late
Jan.Feb,Mar
2020

< 400

penalty = 5% x 500 25 <400 1. extend

need to pay penalty 2. penalty = 10% x 1100 110 // 30
Higher off = 110
 Jan,Feb,Mar

2. penalty = 2%

unting scheme 2. Annual Accounting scheme

nd Paid => VAT return period - Tax Point => VAT return period
od => 3 months - Return Period => 12 months
n => VAT Return and payment => Due date 1 month + 7 days - Summiss => VAT Reurn => 2 months after end of annual period
=> 1 balancing payment
=> Payment => 9 monthly payment => fourth month of
ths < or equal 1,350,000 => Join Threshold
months > 1,600,000 => leave Next 12 months < or equal 1,350,000 => Join
Previous 12 months > 1,600,000 => leave

annual return period = Feb 2019 to Jan 2020

9 monthly payment ### 1
30-Jun-19 2
31-Jul-19 3
### 4
30-Sep-19 5
31-Oct-19 6
### 7
### 8
31-Jan-20 9
Annual Return and ###
balancing payment
er end of annual period

ment => fourth month of annual period

Chapter 17

1. Notice to file a tax return From HMRC to Individual

If not received a notice,
2. Notice of chargeability From individual to HMRC
within 6 months after end of tax year

Example 1
Later of => Due Date // 3 months after notice
non-electronic Electronic
Norma 31 Oct 2020 // 5 July 2020 => 31 Oct 2020 31 Jan 2021 // 5 July 2020
Melanie 31 Oct 2020 // 9 Nov 2020 => 9 Nov 2020 31 Jan 2021 // 9 Nov 2020
Olga 31 Oct 2020 // 11 Mar 2021 => 11 Mar 2021 31 Jan 2021 // 11 Mar 2021

3. Tax Return = paper return (or) electronic return

4. Amending = by HMRC, by individual
5. Overpaid tax
6. Payment => IT, Class 4 NIC, CGT and Class 2 NIC

2 POA and final balancing payment

Payment on account = Relevant amount x 50%
Relevant amount = previous year (IT + Class 4 NIC - PAYE)

Final payment = c/y IT, Class 4 NIC, CGT and Class 2 NIC - 1st POA - 2nd POA - PAYE
6 april 2020 to 5 april 2021
2019/20 2020/21
1st POA 31-Jan-20 31-Jan-21
2nd POA 31-Jul-20 31-Jul-21
Final balancing payment 31-Jan-21 31-Jan-22

31 Jan 2021 => 2019/20 => final payment and 2020/21 => 1st POA

2019/20 => POA = 10000 2019/20 IT = 30000 2019/20 = IT + Class 4 - PAYE

POA reduced = 8000 Class 4 = 5000 35000
x 50%
1st POA 31-Jan-20 8000 => 10000 => 2000 17500
2nd POA 31-Jul-20 8000 => 10000 => 2000
Final payment 31-Jan-21 35000 -16000 = 19000

Interest for reducing POA

from 31 Jan 2020 to 31 Jan 2021 2000 x 3.25% x 12/12 65
From 31 Jul 2020 to 31 Jan 2021 2000 x 3.25% x 6/12 33
98

Example 2

POA = relevant amount x 50%

= 7900 x 50%
3950

Relevant amount = previous year ( IT + Class 4 - PAYE)

= 2018/19 (IT + Class 4 - PAYE)
= 11100 - 3200
7900

1st POA = 3950 31 Jan in the tax year 31-Jan-20

2nd POA = 3950 31 July after tax year 31-Jul-20

Example 3

Final balancing payment = c/y IT + Class 4 + CGT + Class 2 - 1st POA - 2nd POA - PAYE
= 15250 + 5120 + 148 - 6500 -6500 -0
7518

Homework = Example 4
21 // 5 July 2020 => 31 Jan 2021
21 // 9 Nov 2020 => 31 Jan 2021
21 // 11 Mar 2021 => 11 Mar 2021

= IT + Class 4 - PAYE