ACCA TX ^UK Syllabus F. Value Added Tax - Calculate the amount of VAT payable/recoverable - Past Papers ^{1 / 11}

Yui commenced trading on 1 April 2014, and registered for value added tax (VAT) from 1 January 2015. Her first VAT return is for the quarter ended 31 March 2015. During the period 1 April 2014 to 31 March 2015, Yui incurred input VAT of £110 per month in respect of the hire of office equipment.

How much input VAT in respect of the office equipment can Yui reclaim on her VAT return for the quarter ended 31 March 2015?

A. £660
B. £990
C. £330
D. £1,320

Zim has been registered for value added tax (VAT) since 1 April 2005. The following information is available for the year ended 31 March 2015:

(1) Sales invoices totalling £126,000 were issued, of which £115,200 were in respect of standard rated sales and £10,800 were in respect of zero rated sales. Zim’s customers are all members of the general public.

(2) On 31 March 2015, Zim wrote off two impairment losses which were in respect of standard rated sales. The first impairment loss was for £780, and was in respect of a sales invoice which had been due for payment on 15 August 2014. The second impairment loss was for £660, and was in respect of a sales invoice which had been due for payment on 15 September 2014.

(3) Purchase invoices totalling £49,200 were received, of which £43,200 were in respect of standard rated purchases and £6,000 were in respect of zero rated purchases.

(4) Rent of £1,200 is paid each month. During the year ended 31 March 2015, Zim made 13 rental payments because the invoice dated 1 April 2015 was paid early on 31 March 2015. This invoice was in respect of the rent for April 2015.

(5) During the year ended 31 March 2015, Zim spent £2,600 on mobile telephone calls, of which 40% related to private calls.

(6) During the year ended 31 March 2015, Zim spent £1,560 on entertaining customers, of which £240 was in respect of overseas customers.

All of the above figures are inclusive of VAT where applicable. The expenses referred to in notes (4), (5) and (6) are all standard rated.

Zim does not use either the cash accounting scheme or the flat rate scheme. He has forecast that for the year ended 31 March 2016, his total sales will be the same as for the year ended 31 March 2015.

Required:
(a) Calculate the amount of value added tax (VAT) payable by Zim for the year ended 31 March 2015.

Note: You should indicate by the use of zero any items referred to in notes (1) to (6) where there is no VAT impact. (6 marks)

Note that in answering this part of the question, you are not expected to take account of any of the information provided in parts (a) or (b).

Long Ltd, Wind Ltd and Road Ltd are not registered as a group for value added tax (VAT) purposes. The following VAT information is available for the quarter ended 31 March 2014:

Long Ltd
(1) All of Long Ltd’s sales are standard rated for VAT.
(2) Output VAT of £52,640 was charged in respect of sales. This figure includes output VAT of £1,760 on a deposit received on 28 December 2013. The deposit was in respect of a contract which was completed on 6 January 2014, with a sales invoice being issued on 20 January 2014.

(3) In addition to the above, Long Ltd also charged output VAT of £1,940 on sales to Wind Ltd and output VAT of £960 on sales to Road Ltd.

(4) The managing director of Long Ltd is provided with a company motor car which is used for both business and private mileage. The director reimburses Long Ltd for the 40% private use element. For the quarter ended 31 March 2014, input VAT of £140 was incurred in respect of the total cost of fuel.

(5) Input VAT of £14,720 was incurred in respect of expenses. This figure includes input VAT of £560 in respect of repairs to the managing director’s motor car, but it does not include the input VAT in respect of the cost of fuel (see note (4) above).

(6) In addition to the above, Long Ltd has discovered that it has not been claiming for the input VAT of £18 which it has paid each month since 1 January 2008 for the hire of a photocopier.

Wind Ltd
(1) All of Wind Ltd’s sales are exempt from VAT.
(2) Input VAT of £7,330 was incurred in respect of expenses. This includes input VAT of £1,940 incurred on purchases from Long Ltd.

Road Ltd
(1) All of Road Ltd’s sales are zero rated for VAT.
(2) Road Ltd registered for VAT on 1 January 2014 and this is the company’s first VAT return.
(3) Input VAT of £3,120 was incurred in respect of expenses. This includes input VAT of £960 incurred on purchases from Long Ltd.

(4) In addition to the above, Road Ltd incurred input VAT in respect of advertising expenditure as follows:

Required:
Calculate the amount of value added tax (VAT) payable or recoverable, if any, by Long Ltd, Wind Ltd and Road Ltd for the quarter ended 31 March 2014. (10 marks)