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ACCA Applied Skills · Taxation (UK) · The computation of VAT liabilities

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%, which has been unpaid for more than six months from the due date, though Tamsin Ltd previously deducted the input VAT on this invoice. Tamsin Ltd also has a bad debt relief claim of £1,500 on a customer debt. What is the net VAT payable for the quarter, ignoring any other adjustments?

The net VAT payable is £10,200, calculated as output VAT of £18,000 less input VAT of £7,500, plus £1,200 repaid on the unpaid supplier invoice, less the £1,500 bad debt relief claim. This figure is not among the options.

  1. A£7,800Correct
  2. B£10,500
  3. C£9,000
  4. D£9,300

Explanation

Input VAT on the unpaid supplier invoice, £6,000 x 20% = £1,200, must be repaid because the supplier is unpaid after six months. Net payable = 18,000 - 7,500 + 1,200 - 1,500 = £10,200 under this arrangement, but the quarter input of £7,500 already includes the earlier £1,200 recovered? No: the stated input excludes the repayment, so the correct net is 10,200. Therefore this question cannot produce a listed answer.

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