Question

Question 2 2.1 Anisha is a partially exempt trader running a large shop based in a city centre which supplies food, cleaning products, newspapers and postal services. In the quarter ended 28 February 2019 the business records show the following: £ Input VAT relating to 6,785 standard rated supplies Input VAT relating to zero- 3,580 rated supplies Input VAT relating to exempt 7,295 supplies Non-attributable VAT 3,065 TOTAL 20,725 Standard-rated supplies (net) 60,129 Zero-rated supplies 32,258 Exempt supplies 133,500 TOTAL 225,887 e e During the quarter, Anisha also purchased a car for use by an employee at a VAT inclusive cost of £13,500.- Anisha is a partially exempt trader running a large shop based in a city centre which supplies food, cleaning products, newspapers and postal services. In the quarter ended 28 February 2019 the business records show the following:                                                                                                                                    £
Input VAT relating to standard rated supplies Input VAT relating to zero-rated supplies Input VAT relating to exempt supplies Non-attributable VAT TOTAL	6,785 3,580 7,295 3,065 20,725
Standard-rated supplies (net) Zero-rated supplies Exempt supplies TOTAL	60,129 32,258 133,500 225,887

During the quarter, Anisha also purchased a car for use by an employee at a VAT inclusive cost of £13,500.

Requirement

Calculate the amount of input tax payable / repayable by Anisha for the quarter ended 28 February 2019 using the standard method for partial exemption.                    (8 marks)

2.2

Clifton Ltd owns 100% of Sujev SpA and 90% of both Manara Ltd and Dubek Ltd. Dubek Ltd owns 80% of Boag Ltd.

All companies are UK resident with the exception of Sujev SpA which is resident outside
the EU.

Clifton Ltd makes wholly standard-rated supplies in the UK.

Manara Ltd makes wholly zero-rated supplies of goods within the UK.

Sujev SpA makes all of its sales outside of the EU. The supplies would be standard-rated if made in the UK.

Dubek Ltd is partially exempt and makes all supplies in the UK.

Boag Ltd sells to private individuals in the EU (not including the UK). The supplies would be standard-rated if made in the UK.

Requirement

Explain, with reasons, why Clifton Ltd and Boag Ltd, and no other companies, should be registered in a single VAT group.                                                                                                     (6 marks)

Answer 1

Calculation of recoverable percentage of residul input tax using the standard method. Recoverable percentage of =Value of taxable supplies (excluding VAT) / residul input tax Value of total supplies (excluding VAT) *100 = (60,129 +33,258) / 225,887 *100 = 41.34% This shall be rounded up to 42%. Total Non-attributable VAT = 3065 Recoverable portion of non attributable VAT = 3,065*42% = 1,287 Calculation of recoverable amount of input tax Directly attributable taxable supplies (6,785 +3,580) 10,365 Add: Recoverable portion of non attributable VAT 1,287 Total Recoverable input tax 11,652

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