AAT L3 Indirect Tax (UK VAT) 2

Question 1

The cash accounting scheme for VAT means that:

Accepted Answer

Output VAT is accounted for when payment is received and input VAT is reclaimed when payment is made

Answer

VAT is accounted for based on invoice dates

Answer

A business pays a flat rate of 1% of turnover

Answer

VAT returns are submitted annually

Question 2

Which of the following would be classified as a zero-rated supply for UK VAT?

Accepted Answer

Printed books and newspapers

Answer

Adult clothing

Answer

Takeaway hot food

Answer

Domestic electricity

Question 3

Output VAT is the VAT that a business:

Accepted Answer

Charges on its taxable sales and owes to HMRC

Answer

Pays on its own purchases

Answer

Reclaims from HMRC on purchases

Answer

Charges on exempt supplies

Question 4

The annual accounting scheme for VAT allows a business to:

Accepted Answer

Submit one VAT return per year with advance payments during the year

Answer

Pay VAT only once per year without advance payments

Answer

Only apply to businesses with turnover below the registration threshold

Answer

Charge a reduced rate of VAT

Question 5

A business makes both taxable and exempt supplies and is partially exempt. What is the impact on input VAT recovery?

Accepted Answer

Only input VAT attributable to taxable supplies (plus a proportion of residual input tax) can be reclaimed

Answer

All input VAT can be claimed

Answer

No input VAT can be claimed at all

Answer

Input VAT is only reclaimable on capital expenditure

Question 6

The VAT fuel scale charge applies to:

Accepted Answer

Reclaiming input VAT on business fuel purchased for private use in company vehicles

Answer

VAT on electricity bills

Answer

VAT on commercial vehicles

Answer

The reduced rate on domestic heating fuel