Answer is option (B) £121,112 | |||||
Explanation & Workings: | |||||
Input tax incurred exclusively in making taxable supplies can be recovered in full. Input tax incurred exclusively in making exempt supplies cannot be recovered. Residual input tax must be allocated between taxable and exempt supplies, and the partial exemption calculation is the mechanism for calculating this split. | |||||
Input Credit | Status | Amount | |||
£100,000 was attributable to taxable supplies | Fully Recoverable | £1,00,000.00 | |||
£13,000 was attributable to exempt supplies | Not Recoverable | £0.00 | |||
£23,000 was unattributable | Partially Recoverable (23000*91.794872%) | £21,112.00 | |||
Total Input VAT Recoverable | £1,21,112.00 | ||||
The standard method allocates the residual VAT using regulation 101 of SI 1995/2518. The formula is: | |||||
Formula | |||||
Input VAT unattributable *(Taxable supplies / Taxable + exempt supplies )= | £23000*(£895,000 / £975,000 = 21112) |
Shanahan Ltd is registered for VAT and is partially exempt. During the year the company incurred input tax of £136,000....
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...
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...