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Why would annual accounting scheme be more helpful in avoiding further defaults in respect of vat and not cash accounting scheme
Why is the correct answer annual accounting scheme and not cash accounting scheme whilst annual accounting scheme requires nine monthly payments on account which would adversely affect cashflow and make it more difficult to pay vat on time whereas normally only four vat payments will be required for each quarter which would be easier.
Also the cash accounting scheme means that vat is only payable when cash is received therefore easier to pay vat on time because the cash is available and more beneficial in terms of cashflowI’m not sure I understand the question – in what context are you being asked to rank one accounting scheme about another. Every clients situation will be different and what kind of exam questions ask this?
Ardent Ltd was late in submitting its VAT return for the quarter ended 31 March 2022, and in paying the related VAT liability. The company currently does not use either the VAT cash accounting scheme or the annual accounting scheme.
Drag and drop the correct period and VAT scheme from the options below to correctly identify for which period after 31 March 2022 Ardent Ltd will need to avoid further defaults in order to revert to a clean default surcharge record, and which VAT scheme may help in avoiding such further defaults.
Period:
6 months
12 months
Vat scheme:
cash accounting scheme
annual accounting schemeThe answer is given as cash accounting scheme but it seems that it should be annual accounting scheme.
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