• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

BPP Practice and Revision Kit FA 2020, question 29 (Rosa Sept / Dec 19)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › BPP Practice and Revision Kit FA 2020, question 29 (Rosa Sept / Dec 19)

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by kinyuwong.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • August 3, 2021 at 8:33 am #630224
    kinyuwong
    Member
    • Topics: 8
    • Replies: 5
    • ☆

    Hi Tutor,

    Referring to the question below, why is that the retail until to be regarded to be sold during the 8th year in the adjustment period? If Rosa bought the until on 1 May 2015 and sell it on 6 April 2022, shouldn’t it be sold during the 7th year in the adjustment period? Thanks.

    Question

    Disposal of the retail unit:
    – Rosa will sell the retail unit, which is currently being rented to tenants up to 5 April 2022, for its market value of £280,000 on 6 April 2022.
    – Rosa had bought the retail unit when it was newly constructed, on 1 May 2015, for £290,000 plus VAT at 20%.
    – Rosa used the retail unit in her business until 30 April 2019, since when she has let it to unconnected tenants.
    – The retail unit is subject to the capital goods scheme for VAT.
    – Rosa has not opted to tax the retail unit for VAT purposes.

    Answer in BPP

    On 6 April 2022, when the retail unit is sold, it will be more than three years old. Accordingly, the sale will be exempt from VAT as Rosa has not opted to tax it.

    On acquisition, the retail unit was newly constructed, so VAT of £58,000 (£290,000 x 20%) will have been charged. Rosa will have reclaimed the whole of this in the year ended 31 March 2016, as she used it in her business, making wholly standard rated supplies.

    However, as the sale of the retail unit will be an exempt disposal, for the purpose of the capital goods scheme it is deemed to have 0% taxable use for the remainder of the ten-year adjustment period. As the warehouse is sold during the eighth year of the adjustment period, there are two years of the adjustment period remaining, and therefore a final VAT adjustment of £11,600 (£58,000 x 2/10 x (100% – 0%)) will be repayable by Rosa to HM Revenue and Customs (HMRC) in respect of the sale.

    August 3, 2021 at 11:54 am #630251
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    From the information you have provided Rosa acquired the property within her accounting year ended 31 March 2016 – this is year 1 – and she sells on 6 April 2022 – this is in the accounting year ended 31 March 2023 – this is year 8.

    August 6, 2021 at 7:27 am #630538
    kinyuwong
    Member
    • Topics: 8
    • Replies: 5
    • ☆

    Thanks a lot!

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • John Moffat on PM Chapter 13 Questions Standard Costing and Basic Variance Analysis
  • abdallah254 on FA Chapter 2 Questions The Statement of Financial Position and Statement of Profit or Loss
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy