Question 1a Note 4,5
Garfield has been registered for valued added tax (VAT) since 1 April 2008. Garfield has previously completed his VAT returns himself, but for the quarter ended 31 March 2015 there are some items for which he is unsure of the correct VAT treatment.
Garfield’s partly completed VAT computation for the quarter ended 31 March 2015 is shown below. All of the completed sections of the computation are correct, with the omissions marked as outstanding (O/S).
| Note | £ | |
|---|---|---|
| Output VAT | ||
| Sales (all standard rated) | 22,500 | |
| Discounted sale | 1 | O/S |
| Equipment | 2 | O/S |
| Fuel scale charge | 60 | |
| Input VAT | ||
| Purchases (all standard rated) | (11,200) | |
| Motor car (purchased on 1 January 2015) | 0 | |
| Equipment | 2 | O/S |
| Impairment losses | 3 | O/S |
| Entertaining – UK customers | 0 | |
| – Overseas customers | 4 | O/S |
| Motor expenses | 5 | O/S |
| VAT payable | O/S |
Note 4 – Entertaining
During the quarter ended 31 March 2015, Garfield spent £960 on entertaining overseas customers. This figure is inclusive of VAT.
Note 5 – Motor expenses
The motor car purchased on 1 January 2015 is used by Garfield 60% for business mileage. During the quarter ended 31 March 2015, Garfield spent £1,008 on repairs to the motor car and £660 on fuel for both his business and private mileage. Both of these figures are inclusive of VAT.
Required:
Calculate VAT payable by Garfield relating to Note 4 and 5 only for the quarter ended 31 March 2015.