Chapter 24

VAT

Value Added Tax

VAT Registered Business
-charge Output VAT
- can be recovered Input VAT
=> Registeration
1. Compulsory Registeration
- Historical Test
Notice date - within 30 days
Registered date - 1st day of second month

- Future Test
Notice date - within 30 days
Registered date - beginning of that period

=> Deregisteration

1. Compulsory deregisteration 2. Voluntary deregisteration

- cease to make taxable supplies - following one year's turnover = not exceed 83000

Tax Point => Tax Return VAT period Jan, Feb, Mar Mar, April, May
April, May, June June, July, Aug
1. Basic tax point Jul, Aug, Sep Sep, Oct, Nov
2. Invoice issued date Oct, Nov, Dec Dec, Jan, Feb
3. payment received date

I. Payment date Invoice date Before Basic tax point

12-Aug-20 15-Aug-20 2-Sep-20

Earlier date
=> Tax Point : 12 Aug 2020 June, July, Aug

within 14 days 14-Sep-20

II. Basic Tax Point Invoice date Pyament date
1-Sep-20 5-Sep-20 30-Sep-20

=> Tax Point : 5 Sep 2020

III. Basic Tax Point Invoice date Payment date

1-Sep-20 28-Sep-20 15-Oct-20

=> Tax Point : 1 Sep 2020

 Value 10000 100 VAT exclusive Amount Net Amount
VAT 2000 x 20% (+) 20
Total 12000 120 VAT inclusive Amount Gross Amount

VAT = VAT inclusive amount x 20/120 (or) 1/6

VAT = Gross amount x 20/120

Example 5

Amount 1000 => payment 250 + VAT 25-Apr-19 1st tax point
=> payment 750 + VAT Unknown 2nd tax point

VAT Return period => to 30 April 2019 Feb,Mar, April 2019 May, Jun, July 2019

1st Tax Point

Payment date before Basic tax point Invoice date

25-Apr-19 28-May-19 4-Jun-19

Tax Point : 25 April 2019 Feb, Mar, April VAT = Net x 20% = 250x20% 50

2nd Tax Point within 14 days 11-Jun-19

Basic tax point Invoice date
28-May-19 4-Jun-19

Tax Point : 4 June 2019 May, Jun, July VAT = Net x 20% = 750 x 20% 150

Example 6

(a) 20-Mar-20 VAT = Net x 20% = 4500 x 20% 900

5000 x 90% = 4500

(b) 30-Mar-20 VAT = Net x 20% = 5000 x 20% 1000

Fuel scale charge => given

Example 7

VAT = VAT inclusive amount x 20/120

Input VAT recovered = 360 x 20/120 60

Output VAT charge 176g/km car 1 month = 351x20/120 x1/3 20
(fuel scale charge) 208g/km car 2 month = 436x20/120 x 1/3 24
44
VAT claimed from HMRC = 60-44 = 16

Example 8
Inclusive VAT
Total = 2000 500 paid
1500 bad debt

Impairment loss relief = 1500 x 20/120 250 => claimed from HMRC

due date 15 July 2019 => over 6 months - 15 Jan 2020

Jan, Feb Mar => period ended 31 Mar 2020 => Tax Return
 2. Voluntary Registeration

er = not exceed 83000

Mar, April, May

June, July, Aug
Sep, Oct, Nov
Dec, Jan, Feb

Payment date
Net Amount

Gross Amount

May, Jun, July 2019

Payment