Indirect Tax (UK VAT) Flashcards

The threshold for compulsory VAT deregistration is triggered when taxable turnover is expected to fall below:

Answer: The registration threshold

A business may deregister if it can satisfy HMRC that taxable supplies in the next 12 months will not exceed the deregistration threshold, which is set at the same level as the registration threshold (currently £90,000).

Disbursements for VAT purposes are:

Answer: Expenses incurred by a business and recharged to clients at cost with no VAT markup, where specific conditions are met

A disbursement is a payment made on behalf of a client where the client is the recipient of the supply, not the business; if correctly treated as a disbursement, no VAT is added when recharging the client.

For the purposes of the VAT retail schemes, a retailer making mixed-rate supplies uses these schemes to:

Answer: Calculate output VAT without having to identify the VAT liability on every individual sale

VAT retail schemes (Point of Sale, Apportionment, Direct Calculation) allow retailers with mixed-rate sales to calculate output VAT without separately identifying VAT on every transaction, reducing administrative burden.

Which of the following is a consequence of issuing a VAT invoice when NOT VAT-registered?

Answer: The issuer commits a criminal offence and HMRC may demand the VAT shown

Issuing an invoice that shows a VAT number or charge when not registered is a criminal offence; HMRC can also recover the VAT shown on such invoices from the unregistered issuer.

For a partly business, partly private use asset, a business can recover VAT on:

Answer: Only the business use proportion of the VAT

For most assets with mixed business and private use, only the business-use proportion of input VAT is reclaimable. However, for VAT purposes, certain rules allow full recovery with an output VAT charge for private use (mainly capital goods).

The VAT registration number format in the UK is:

Answer: A 9-digit number with the prefix GB

UK VAT registration numbers follow the format GB followed by 9 digits (e.g., GB 123 4567 89). Since Brexit, EU VAT numbers used by UK businesses for EU transactions follow different formats.