Value added tax

Test your understanding

(1). Jerome is a decorator. On 20 July 2022, he started a contract to decorate an office building, completing the contract on 23 August 2022. An invoice was issued for the full amount of the contract on 3 September 2022 and this was paid by the client on 10 November 2022.

What is the tax point (date of supply) for Jerome’s decorating contract?

A  20 July 2022
B  23 August 2022
C  3 September 2022
D  10 November 2022
 

(2). Ming prepares VAT returns for the quarters ended 31 March, 30 June, 30 September and 31 December. On 10 May 2022, she purchased standard rated goods costing £5,000 from an overseas supplier. The goods were sold for £8,000 on 2 August 2022. These figures are exclusive of VAT.

What entries will be made on Ming’s VAT returns in respect of these goods?

A  Output VAT of £1,600 for the quarter ended 30 September 2022
B  Input VAT and output VAT of £1,000 for the quarter ended 30 June 2022, and output VAT of £1,600 for the quarter ended 30 September 2022
C  Input VAT of £1,000 for the quarter ended 30 June 2022, and output VAT of £1,600 for the quarter ended 30 September 2022
D  Input VAT of £1,000 and output VAT of £1,600 for the quarter ended 30 September 2022
 

(3). In which circumstances will a VAT registered business be required to issue a VAT invoice?

A  When a standard rated supply is made to any customer
B  When any type of supply is made to any customer
C  When a standard rated supply is made to a VAT registered customer
D  When any type of supply is made to a VAT registered customer
 

(4). Which item of information is not required on a simplified VAT invoice?

A  The supplier’s VAT registration number
B  The supplier’s name and address
C  The customer’s name and address
D  The rate of VAT
 

(5). How will an overpayment of VAT of £5,400 be reclaimed from HMRC?

A  By entering it on the current VAT return
B  By making a separate claim to HMRC
C  By resubmitting the incorrect VAT return
D  By submitting a separate VAT return just for the overpayment


The following scenario relates to questions 6-10.

Alice commenced trading on 1 January 2022. During the period 1 January to 30 April 2022, her taxable supplies were £9,000 per month; during the period 1 May to 31 August 2022, they were £10,500 per month; and during the period 1 September to 31 December 2022, they were £12,000 per month.

Alice is now in the process of completing her VAT return for the quarter ended 31 March 2023. During the quarter, sales invoices totaling £66,900 (exclusive of VAT) were issued in respect of standard rated sales, whilst standard rated expenses amounted to £19,200 (inclusive of VAT).

Required:

(6). From what date was Alice required to be registered for VAT?

A  1 November 2022
B  1 October 2022
C  1 December 2022
D  1 September 2022
 

(7). Which of the following is not a condition for the recovery of pre-registration input VAT incurred in respect of goods?

A  The goods must have been acquired in the four years prior to registration
B  The goods must have been acquired for business purposes
C  The goods must not have been sold or consumed prior to registration
D  The goods must have been paid for prior to registration
 

(8). How much VAT will Alice have to pay to HMRC in respect of the quarter ended 31 March 2023?

A  £9,540
B  £10,180
C  £7,950
D  £7,310
 

(9). By what date will Alice’s VAT return for the quarter ended 31 March 2023 have to be submitted to HMRC?

A  30 April 2023
B  7 May 2023
C  7 April 2023
D  31 March 2023
 

(10). Which VAT scheme would provide Alice with automatic relief for impairment losses?

A  The cash accounting scheme
B  The flat rate scheme
C  The annual accounting scheme
D  None of the schemes

Answers