Question 3c i
Nocturne Ltd, a partially exempt company for the purposes of value added tax (VAT), requires advice on simplifying the way in which it accounts for VAT.
VAT – partial exemption:
– Nocturne Ltd is partially exempt for the purposes of VAT.
– Nocturne Ltd’s turnover for the year ended 31 March 2015 was £240,000 (VAT exclusive).
– Nocturne Ltd’s turnover for the year as a whole for VAT purposes comprised 86% taxable supplies and 14% exempt supplies.
– The input VAT suffered by Nocturne Ltd on expenditure during the year ended 31 March 2015 was:
| £ | |
|---|---|
| Wholly attributable to taxable supplies | 7,920 |
| Wholly attributable to exempt supplies | 1,062 |
| Unattributable | 4,150 |
– Nocturne Ltd expects its turnover and expenditure figures to increase by approximately 25% next year.
– Siglio has heard about an annual test for computing the amount of recoverable input VAT during an accounting period and would like more information about this.
Required:
(c) (i) Determine, by reference to the de minimis tests 1 and 2, Nocturne Ltd’s recoverable input VAT for the year ended 31 March 2015. (4 marks)