Read each question carefully and select the answer you think is correct (do your working to determine this as necessary). Once you have made your selection check if this is correct.
Paddy Hanham operates a trade selling garden tools and equipment. He is a small trader, but checks his turnover level to ensure that he stays below the VAT registration threshold. At the end of October, his average monthly turnover of taxable supplies was £2,900. On 14 November 2021, he receives a large order from a new customer for goods worth £62,000, to be supplied and invoiced within the next 28 days. The new customer has agreed to switch to Paddy’s products from another supplier and will use Paddy in future. Paddy’ s notification and registration dates are:
Notification by 13 December 2021, registration date 14 November 2021.
Notification by 13 December 2021, registration date 14 December 2021.
Notification by 31 December 2021, registration date 1 January 2022.
Notification by 31 January 2022, registration date 1 February 2022.
Valambrossa Ltd agreed to construct a rubber processing plant for another, unrelated company, and began work on its construction during September of 2020. Construction of the plant was completed on 16 April 2021. Payment for the work done was received on 12 April 2021 and Valambrossa Ltd issued a VAT invoice on 3 May 2021. The customer started using the plant on 18 March 2020 even though construction was not actually complete at that date. The VAT point for the supply of the plant is:
12 April 2021
16 April 2021
2 May 2021
18 March 2021
Godalming Ltd is a manufacturer of ceramic houseware. The company was represented at a National Homes exhibition in August 2021 and gave away several items for promotion purposes: 1. 25 sample ceramic vases which cost £30 to manufacture and retail for £45 each and 2. 250 watches costing £6 each with the name of the company clearly displayed on the face. How much output tax is to be included in the VAT return for the September 2018 quarter in respect of these transactions? (The figures given are VAT exclusive.)
£nil
£525
£450
£300
Frank Benjamin is a sole trader engaged in the manufacture of pine bookcases. He is registered for VAT. On 31 August 2021 Frank received an order for two bookcases. He delivered the completed bookcases to the customer on 21 September 2021 and issued an invoice on 30 September 2021. The customer settled the account on 14 October 2021. What is the VAT tax point for the bookcase transaction?
31 August 2021
21 September 2021
30 September 2021
14 October 2021
Pokemon Ltd is a manufacturer of children’s toys, is VAT registered and operates a cash accounting scheme. The following transactions arise during the March 2022 quarter: 1. Raw materials of £2,000 (VAT exclusive) acquired for cash payment 2. Sales valued at £4,000 (VAT exclusive) invoiced to customers 3. Cash received from trade debtors £3,525 What is the VAT due in respect of these transactions?
£187.50
£305
£400
£875
Which of the following statements is NOT true?
VAT was introduced in the UK in April 1973.
VAT brings in very little revenue to the government
A charge to VAT arises on a taxable supply of goods or services by a taxable person.
Taxable supplies subject to VAT include processing goods supplied by another person.
The penalty for late registration for VAT depends on the length of the period between the date when notification should have occurred and the date of actual notification. Where the period is between 9 and 18 months, the penalty will be:
Nil
5% of the tax
10% of the tax
15% of the tax
20% of the tax
The issue of tax invoices is an important part of the VAT system. Detailed invoices must be issued by all traders irrespective of the nature of their taxable supplies.
True
False
The general rule is that input tax in respect of cars cannot be reclaimed. Which of the following are exceptions to that rule? 1. cars which are acquired new with the intention of resale by a car dealer 2. cars to be leased or used in a driving school 3. cars acquired after 1 August 1995 and used wholly for business purposes
1 and 2
1, 2 and 3
2 and 3
1 and 3
In addition to input tax on cars, a number of items of expenditure cannot have their input tax reclaimed. Which of the following types of expenditure result in unrecoverable input tax?
Business entertaining regardless of whether it is deductible for income or corporation tax purposes.
Living accommodation for all employees.
Non - business items which have been recorded in the business accounts.
Exempt supplies contain no element of VAT.
True
False
Which of the following statements is NOT true?
Export of goods to a place outside the EU is zero rated.
Group registration is available where all companies in a group are resident in the UK or have an established business in the UK.
The reverse charge procedure for services applies where a registered UK resident trader receives services from a person resident overseas.
Imports of works of art, antiques and collectors pieces from outside the EU are subjected to VAT at a reduced rate of 5%.
Jeremy Fisher is a VAT registered sole trader who has been authorised to use the annual accounting scheme for VAT. His annual period is 31 September and his estimated VAT liability for the year ended 30 September 2021 is £60,000. The interim payments required will be: