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 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.                              

Answer 1

1. Calculation of Output VAT on Standard-rated supplies:

Assuming VAT rate @10%

Standard rated supplies = 60,129

Output VAT = 60,129*10%

= 6,013(Approx)

2. Input VAT relating to standard rated supplies, zero rated supplies is eligible input. But input relating to exempt supplies is ineligible.

Non attributable VAT to be availed in the ratio of Standard rated supplies+zero rated supplies/Total supplies.

  

Calculating the ratio of Eligible VAT = 60,129+32,258/225,887

= 92,387/225,887

= 40.90%

3. Calculation of Eligible Input VAT:

Particulars	Amount
Input VAT relating to standard rated supplies	6,785.00
Input VAT relating to zero-rated supplies	3,580.00
Non attributable VAT - [email protected]% (3065*40.90%)	1,253.59
Input VAT on purchase of Car (13500*10/110)	1,227.27
Total VAT Input available	12,845.86

4. Claculation Input tax payable or repayable by anisha for the quarter ended 28 February 2019:

Total Output VAT payable(point-1)	6,013.00
Less: Input Vat available(point-3)	12,845.86
Balance- Input transferred to next quarter	-6,832.86

Input VAT transfered to next quarter is 6,832.86