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VAT exam kit question issue

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › VAT exam kit question issue

  • This topic has 1 reply, 1 voice, and was last updated 4 years ago by geniuz999.
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  • October 31, 2020 at 6:33 pm #593685
    geniuz999
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    • Topics: 21
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    • ☆☆

    Kaplan Exam kit Question no. 288 : During the quarter ended 31 march 2020 a trader leased a motor car at a cost of £700(exclusive of VAT) , the motor car is used by the Trader and 75% of the mileage is for private journeys. What is the amount of non-deductible input VAT in respect to the leasing cost of the motor car ?

    According to my understanding (£700×20%)x75%= £105 the amount not deductible as VAT but in the exam kit the answer is (£700×20%)x50%= £70 , what am i missing here ? If it was a purchase of motor car instead of lease then all the input VAT would be non-deductible but since its a lease of motor car i apportioned it according to the actual private usage to calculate disallowed amount of input vat.

    October 31, 2020 at 7:13 pm #593686
    geniuz999
    Participant
    • Topics: 21
    • Replies: 43
    • ☆☆

    I understood it now , I just had a look at technical articles on ACCA website which states “Where a leased motor car is available for private use, then 50% of input VAT on leasing costs is non-deductible”. This was not mentioned in OT notes so i got confused .

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