AAT L3 Tax Processes for Business 2

Question 1

A business purchases goods for £600 including VAT at 20%. What is the net amount and the VAT amount?

Accepted Answer

Net £500, VAT £100

Answer

Net £480, VAT £120

Answer

Net £504, VAT £96

Answer

Net £510, VAT £90

Question 2

Under PAYE, an employer must deduct income tax and National Insurance contributions from employees' pay. By what date must these deductions be paid to HMRC each month?

Accepted Answer

By the 22nd of the following month (for electronic payments)

Answer

By the last day of the same month

Answer

By the 5th of the following month

Answer

By the 14th of the following month

Question 3

Which of the following expenses can a business typically reclaim input VAT on?

Accepted Answer

Office stationery and computer equipment used for business

Answer

Staff entertaining and hospitality for employees

Answer

Business entertaining for clients

Answer

A car used partly for private purposes by a director

Question 4

What is the flat rate VAT scheme designed for?

Accepted Answer

Small businesses with taxable turnover of £150,000 or less, to simplify VAT accounting

Answer

All businesses regardless of size

Answer

Businesses that only make exempt supplies

Answer

Businesses that trade internationally

Question 5

Corporation tax is currently charged at what rate for companies with profits exceeding £250,000?

Accepted Answer

25%

Answer

19%

Answer

20%

Answer

23%

Question 6

A business issues a credit note to a customer for £240 including VAT at 20%. What adjustment is required to the VAT account?

Accepted Answer

Reduce output VAT by £40

Answer

Increase output VAT by £40

Answer

Reduce input VAT by £40

Answer

Increase input VAT by £40