ACCA Applied Skills · Taxation (UK) · The computation of VAT liabilities
Harlow Ltd is VAT registered and makes only standard-rated supplies. It bought office furniture for its own use for £6,000 plus VAT at the standard rate of 20%. The VAT was shown on a valid VAT invoice. How much input VAT can Harlow Ltd normally recover on this purchase?
Harlow Ltd can recover £1,200. Input VAT is 20% of the £6,000 net cost, and a business making only standard-rated supplies can recover VAT on business purchases supported by a valid VAT invoice.
- A£1,200Correct
- B£1,000
- C£0
- D£600
Explanation
VAT is 20% x £6,000 = £1,200. A fully taxable business can recover input VAT on purchases used for business purposes when it holds a valid VAT invoice. £1,000 wrongly treats £6,000 as the VAT-inclusive figure.
Did you get it right without looking?
One question tells you little. A timed set on The computation of VAT liabilities shows your real accuracy, how long you take and where you lose marks.
More The computation of VAT liabilities questions
- Dunmore Ltd made a standard-rated supply and issued an invoice showing a VAT-inclusive total of £14,400. What is the output VAT on this supp…
- Brindle Ltd is VAT registered. It entertained UK customers at a restaurant, with a total bill of £360 including VAT at 20%, and entertained …
- Orla trades and makes taxable supplies of £70,000 (standard-rated) in the last 12 months, together with exempt supplies of £25,000. Which of…
- Tamsin Ltd is VAT registered. In its quarter, output VAT was £18,000 and input VAT was £7,500. It also owes a supplier £6,000 plus VAT at 20…
- Tamsin is a VAT-registered sole trader who makes only standard-rated supplies. In the quarter she bought a laptop for use solely in her busi…
- Marlow Ltd did not pay its VAT liability for a quarter until 20 days after the due date. The VAT due was £30,000. Under the penalty rules fo…