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Hello.
-Yui commenced trading on the 1 April 2018, and registered for value added tax from 1 January 2019. His first VAT return is for the quarter ended 31 March 2019. During the period 1 April 2018 to 31 March 2019, Yui incurred VAT of £110 per month in respect of the hire of office equipment.
How much input VAT, in respect of the office equipment, can Yui reclaim on her VAT return for the quarter ended 31 March 2019?1. The answer is £990.
2.The working is as follows:
-1.7.18-31.12.18=6 x 110=660
-1.1.19-31.3.19=3 x 110=3303. Could you explain why “1.7.18-31.12.18=6 x 110=660” has been done?
-Nowhere in the question, it states that Yui wants to recover pre-registration input VAT.Thanks.
The question does not have to state that – the question asks “how much VAT CAN Yui reclaim on her VAT return” and that is how much she can reclaim!
Hello sir,
I’m confused with what is zero rated supplies and exempt supplies. As given in your notes, when a trader makes taxable supplies of more than £85,000 in the previous 12 months, he’s required to register for VAT. Taxable supplies include zero rated supplies also and a trader cannot make standard rate supplies without being registered for VAT. So if a trader makes exempt supplies of more than £85,000 he’s not required to register for VAT right? So Can you please explain me the logic in this basic thing?Thanks
Tax is a system of rules created and amended by HMRC – the question of logic does not apply! The rules you need to learn and apply in this area are given in section 1.1 (a) and (b) of the notes.
If a trader ONLY makes exempt supplies then he CANNOT register for VAT meaning that he cannot then reclaim any of the input tax suffered on the business expenses incurred.
If a trader makes taxable supplies then he will be able to reclaim the input tax suffered on his business expenses meaning that his net cost of an expense of £120 including VAT is only £100 instead of £120.
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