Question

Samson plc is registered for VAT.

The following information relates to the company’s VAT return for the quarter ended 31 March 2020:

1. Sales invoices totalling £330,000 were issued to VAT registered customers, of which £240,000 were for standard-rated sales and £90,000 were for zero-rated sales.

2. Samson plc offers its standard-rated customers a 5% discount for prompt payment. This discount was taken by 1/3 of the customers.

3. Purchase invoices totalling £154,000 were received from VAT registered suppliers, of which £136,000 were for standard-rated purchases and £18,000 for zero-rated purchases.

4. Standard-rated expenses amounted to £28,000. This includes £3,900 for entertaining UK customers.

5. On 15 March 2020, the company wrote off irrecoverable receivables of £4,000 and £1,680 in respect of invoices that were due for payment on 10 August 2019 and 5 November 2019 respectively.

6. On 11 January 2020, Samson plc purchased machinery for £24,000 and sold office fittings for £8,000. Input VAT had been claimed when the office fittings were originally purchased.
7. On 1 March 2020, Samson plc purchased a motor car costing £28,400 for the use of its finance director. The finance director is provided with free petrol for private mileage, and the cost of this is included in the standard-rated expenses in note (iv). The relevant quarterly scale charge is £432. Both figures are inclusive of VAT.

Unless stated otherwise, all of the figures above are exclusive of VAT.

YOU ARE REQUIRED TO:

1. Calculate the VAT payable by Samson plc for the quarter ended 31 March 2020 and state the payment due date.

2. Samson plc is experiencing cash-flow difficulties. The company submitted its VAT return and paid the VAT due for the quarter ended 31 December 2019 on 15 March 2020.

State the consequences if Samson plc does not submit the return for the quarter ended 31 March 2020 until 25 May 2020.

(maximum word count 80 words)

TOTAL 20 MARKS

UK TAX

Answer 1

A	Calculation of VAT payable by Samson Plc for the quarter ended 31/03/2020:
	Standered rate =20%
	Particulars	Amount	VAT
1	Sales- Vat	2,40,000.00	40,000.00
	Zero rated	90,000.00	-
2	cash discount	-12,000.00	-2,000.00
	When there is such precondition exist for the payment of invoice then buyer is aware and gave his consant then only VAT can be leviable after cash discount
3	Purchase
	Standered dealer	-1,36,000.00	-22,666.67
	Zero rated	18,000.00	-
4	Standered rating expenses	-24,100.00	-4,016.67
	Client entertainment	-3,900.00		VAT on client entertainment cannot be claimed .
5	Bad debts
	more than six month Old	-4,000.00	-666.67	Only debts which are 6 month old can be claimed for vat provided tax has paid on that and writeoff in books
	Less then Six month	-1,680.00
6	Machinery purcchased	-24,000.00	-4,000.00
	Office fittings	4,000.00	666.67
7	Car and fuel	-28,832.00	-4,805.33
	Net Vat payment =
	Output Vat	40,666.67
	Input tax	-38,155.33	2,511.33
	Payment due date for the quarter ended 31.03.2020 is
	07-May-20
B	When return is filled late and turnover is more than pound 150000 then there is no penalty for the first time default however for the seconf time default a surcharge of 2 % on vat payment will occure provided it is nmore than pound 400.
	In addition Interest @ 2.75 % will be charged per day from date of payment due to the actual date of payment .
	In the given case 2nd default happen for the quarter ended march return due date payment for the same is 7/05/2020 and turnover also exceed 150000 then :
	Penalty:	50.23
	Interest for 18 days	1,243.11
	Total intt and penalty	1,293.34