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a. Nine monthly payments are made on account, each being 10% of the previous year’s VAT, in months 4 to 12 of the period with any balancing payment being made with the VAT return, or they may choose to pay quarterly instead .
b..A new business will base its payments on an estimate of the VAT liability for the year.
c..A balancing payment is made when return is filled.
plz explain me above points referring question below :
Jump ltd applies to use the annual accounting scheme from 1 jan 2014. the company’s net VAT liability for the y/e 31 dec 2013, was 3600. the actual net VAT liability for the y/e 31 dec 2014, is 3821.
Explain the returns and payments jump ltd must make for the y/e 31 dec 2014.Payments are related to liability of year before.Payments will commence in fourth month April 2015.Ten per cent of liability of year before is 360.This will be paid each month from April to December inclusive – for nine months.360 x 9=3240.This is amount paid using basic approach.However,since this is less than liability for VAT for current year a balancing payment must be made.The balancing payment will be 3821-3240=581.This together with a VAT return should be made within a certain time period from year end which I think is two months- by end of February 2015.
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