Lecture notes

lecture 15 VAT

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Module
Tax (ACC3140)

Institution
Middlesex University (MDX)

Describe the principles of VAT. · Distinguish between taxable and exempt supplies, and explain the consequences of both types of supply. · Determine whether a trader should register for VAT. · Determine the value of a supply · Advise on the VAT treatment of imports and exports ·...

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Uploaded on August 19, 2023
Number of pages 10
Written in 2023/2024
Type Lecture notes
Professor(s) Richard jones
Contains All classes

vat
exempt supplies
register for vat
value of supply
imports
exports
hmrc
vat schemes
vat liabilities
penalties for non compliance

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ACC3140 – Taxation
Unit 15 - VAT
OUTCOMES
 Describe the principles of VAT
 Identify taxable persons
 Distinguish between taxable and exempt, and explain the consequences of both types of supply
 Determine whether a trader should register for VAT
 Determine the value of a supply
 Advise on the VAT treatment of imports and exports
 Compute VAT payable to HMRC
 Describe the various VAT schemes and explain their relevance
 Describe the administration of VAT and the penalties for non-compliance
 Explain tax point, bad debt relief, and describe the information to be shown on an invoice.
 Advise a trader on VAT liabilities and any planning which could be undertaken to minimise those
liabilities Explain the significance of VAT in the context of a UK company which is a member of a group
with worldwide interests
 Making Tax Digital

INTRODUCTION TO VAT
 Indirect consumer tax
 Multi-staged, self-assessed tax, borne by final consumer
 Traders charge VAT on sales to customers: output tax
 Reclaim VAT on purchases: input tax

CHARGE TO VAT
Taxable supply of goods or services:
 Within the UK
 Made by a taxable person

 In a business capacity
No need for a profit motive to exist

TAXABLE SUPPLIES
 A taxable supply is any supply of goods or services in the UK
 Other than a supply which is specifically exempted from VAT
 VAT is charged at the standard rate of 20%
 Unless the supply is taxed at 5% (reduced rate) or at 0% (zero-rate)

TAXABLE PERSON
Registered or should be registered
‘Business’ is given a very wide definition to include:
 trade, profession, or vocation
 admission to premises
 memberships/ subscriptions
A taxable person should charge VAT to customers and may reclaim input tax

ZERO-RATED SUPPLIES
 VAT charged on outputs at 0%
 Related input VAT can be reclaimed
 A person who only makes zero-rated supplies will often be in a VAT reclaim position
ZERO-RATED SUPPLIES

, Most food Transport

Water and sewerage Caravans and boats

Books, newspapers Gold

Talking books and wireless sets Bank notes

Construction of buildings for residential/charitable Drugs/ Medicines/ Aids
purposes

Women’s sanitary products Exports

International Services Certain international services

Charities Clothing/footwear for children

EXEMPT SUPPLIES
 No VAT charged on exempt supply
 However, related input VAT cannot be reclaimed
 A person who only makes exempt supplies cannot register for VAT

EXEMPT SUPPLIES

Land Health

Insurance Burial and Cremation

Postal Service Trade unions and professional bodies

Betting, gambling, lotteries Sports competitions and sports

Finance Works of art supplied to public bodies

Education One-off fund raising events

Cultural services Investment gold

Reduced rate supplies (all at 5%)

Fuel and power supplied for Contraceptive products
domestic or charity use

Installation of energy-efficient Welfare advice

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