Question 1a Note 1
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 1 – Discounted sale
On 10 February 2015, a sales invoice for £4,300 was issued by Garfield in respect of a standard rated supply. To encourage this previously late paying customer to pay promptly, Garfield offered a 10% discount for payment within 14 days of the date of the sales invoice. The customer paid within the 14-day period.
This invoice has not been taken into account in calculating the output VAT figure of £22,500, and this is the only sale for which Garfield has offered a prompt payment discount.
Required:
Calculate VAT payable by Garfield relating to Note 1 only for the quarter ended 31 March 2015.