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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › question

  • This topic has 2 replies, 2 voices, and was last updated 10 months ago by Tax Tutor.
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  • March 6, 2022 at 5:39 am #649951
    xyzc
    Participant
    • Topics: 350
    • Replies: 127
    • ☆☆☆

    Standard rated materials amounted to £32,400, of which £600 were taken by the sole trader for personal use.

    I think the input vat would be 6360 i.e. after deducting 600 from 32400 and then calculating input vat. but in the technical article value added tax part 1 example 12 the input vat has been calculated as 6480 i.e. calculating 20% on 32400 without deducting 600.
    Why is it so Is it incorrect

    March 6, 2022 at 5:48 am #649954
    xyzc
    Participant
    • Topics: 350
    • Replies: 127
    • ☆☆☆

    Also why would output vat be charged on 600

    March 7, 2022 at 10:00 am #650041
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    Both your answer and the one shown in the article are correct – they are just alternative ways of getting the same outcome!
    You have done what I would also have done and simply treated the input tax on the private use purchase as irrecoverable and therefore got net input VAT recovered as £6,360 whereas the answer has firstly shown input tax on the full purchases as £6,480 and then shown output tax of £120 (600 x 20%) and therefore also has net input tax of £6,360 (6480 – 120).

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