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Question 3b

Smart Ltd commenced trading on 1 September 2014. The company’s sales for the first four months of trading were as follows:
2014 £
September 26,000
October 47,000
November 134,000
December 113,000

On 1 November 2014, the company signed a contract valued at £86,000 for completion during November 2014.

All of the above figures are stated exclusive of value added tax (VAT). Smart Ltd only supplies services and all of the company’s supplies are standard rated.

Smart Ltd allows its customers 60 days credit when paying for services, and it is concerned that some customers will default on the payment of their debts. The company pays its purchase invoices as soon as they are received.

Smart Ltd does not use either the VAT cash accounting scheme or the annual accounting scheme.

Required:
(b) State how and when Smart Ltd will have to submit its quarterly VAT returns and pay any related VAT liability.

Note: You are not expected to cover substantial traders or the election for monthly returns. (2 marks)