ICAEW CFAB PoT Revision Class - VAT

A trainee accountant made the following statements about VAT.

(1) A gift of goods worth £500 to a customer is not treated as a supply of goods

(2) Any gift of services is not a taxable supply

(3) The phrase 'supplies outside the scope of VAT' is just another way of saying that the goods are exempt

(4) Taxable supplies are subject to VAT at the rate of 0%, 5% or 20%

Which of the following options correctly identifies the statements which are true?

• None of them

• All of them

• 2 and 4

• 2, 3 and 4

• 1, 2 and 3

Judith trades as a sole trader with a holistic therapy business. She has a separate business, also run as a sole trader, providing training courses. She is also a partner in a counselling business. All three businesses have a taxable turnover in excess of £200,000 pa.

What is the maximum number of VAT registrations to which Judith could be a party?

• One

• Two

• Three

• She may elect for two or three

Caroline started trading in September 2023 but did not register for VAT because she expected that her turnover would be below the registration limits. On 14 January 2024 she realised that her future taxable turnover would exceed £85,000 for the next 30 days.

What is the date from which Caroline will be registered for VAT?

• 1 January 2024

• 14 January 2024

• 13 February 2024

• 1 March 2024

Sam ordered some goods from Gramps Ltd on 1 January 2024. Enclosed with the order was a cheque for the goods, which Gramps Ltd received on 3 January 2024. The goods were dispatched on 9 January 2024 and received by Sam on 10 January 2024. Gramps Ltd issued a VAT invoice on 12 January 2024. Gramps Ltd is not a member of the cash accounting scheme.

What is the tax point for the supply?

• 1 January 2024

• 3 January 2024

• 9 January 2024

• 10 January 2024

• 12 January 2024

Martyn is a VAT-registered trader who has made the following purchases in the past month.

Input VAT suffered                                                                                                                                 £ 

Rugby World Cup tickets for his private use                                                                                     700

Stationery for business use (Martyn has lost the VAT receipt)                                                    1,050

Office equipment                                                                                                                                300

How much input tax can Martyn recover on these items?

• £300

• £1,050

• £1,350

• £2,050

Mango Ltd incurred the following capital expenditure (including VAT).

                                                                                                                       £

New car                                                                                                     11,750 (50% business use)

Second-hand van                                                                                        5,875

Delivery lorry                                                                                            35,250

How much VAT can be reclaimed in respect of the above?

• £5,875

• £6,854

• £7,833

• £8,813

Which two of the following are taxable supplies?

• Gift of a trade sample to each customer, each item retails at £90

• Gift of goods to the brother of the managing director costing £150

• Payment of dividends to shareholders of £4,000

• Goods permanently taken out of the business by sales director valued at £400

Micro Ltd intends to register voluntarily for VAT.

Select whether the following statements are true or false.

Micro Ltd can only register if it is making purely taxable supplies.

A       True

B       False

Micro Ltd can only register if it is expecting to be in a repayment position.

C       True

D             False

• True

• False

• True

• False

Toussaint orders some goods on sale or return from Plug Ltd on 1 May. They are dispatched on 10 May. Toussaint adopts the goods on 4 June. Toussaint then receives the invoice for the goods dated 10 June. Plug Ltd received payment for the goods on 30 June. Toussaint is not a member of the cash accounting scheme.

What is the actual tax point of the transaction?

• 1 May

• 10 May

• 4 June

• 10 June

Nancy, a VAT-registered trader, incurs the following expenditure.

Select whether input tax is recoverable on each item.

Christmas party for staff.

A       Recoverable

B       Not recoverable

Hiring a marquee at a sporting event to use for entertaining of UK customers.

C       Recoverable

D       Not recoverable

• Recoverable

• Not recoverable

• Recoverable

• Not recoverable