Question

Jerry Ltd a UK company sells Standard Rated and zero ratedgoods in UK and exports to overseas. Also, Jerry Ltd purchases standard rated goods and zero rated goods from UK suppliers and from overseas. On 1 January 2020, Jerry Ltd has registered for VAT based on compulsory Registration.

The following transactions occurred during the quarter ended 31 March 2020:

(i) Standard Rated Sales during the quarter ended 31 March 2020 was £200,000 (excluding VAT) and £30,000 zero rated sales . These sales are for UK customers.

(ii) Standard Rated Purchases during the quarter ended 31 March 2020 was £36,000 (including VAT) and £15,000 Zero Rated Sales. These purchases are from UK suppliers.

(iii) Jerry Ltd spent totally £8,000 (including VAT) for the Entertainment expenses, out of which £4,000 for UK customers, £1,000 for the Staff and £3,000 is for Overseas Customers.

(iv) On 15 January 2020, Jerry Ltd purchased 2 cars, the details of the cars are as follows:

Car no. 1	Car Costing £20,000 (including VAT) for the Director of the company, who uses the car both for personal and business purposes.
Car No. 2	Car Costing £18,000 (including VAT) for the Salesman, who uses the car fully for business purposes.

(v) Jerry Ltd purchased fuel costing £16,000 (excluding VAT) during the quarter ended 31/3/2020. Jerry Ltd consumed the fuel for business purposes as well as for the car used by the Director (car no.1). The scale charge for the car used by the Director was £540 (including VAT).

(vi) Jerry Ltd also imported £10,000 goods and £5,000 services from India. Jerry Ltd paid 20% import duty while releasing the goods and services from the port of UK.

(vii) Jerry Ltd exported £15,000 standard rated goods and £20,000 services to Singapore.

Note: If not mentioned specifically, all figures are VAT exclusive.

You are required to

a) Prepare VAT Account for the quarter ended 31 March 2020 and specify the due date for the payment of VAT.​Wherever required give special note.

​​​​​​   ​​      (13 marks)

b) Explain the various conditions to claim the Relief for bad debts under VAT

(word count = 100 words)      ​​​​  

Answer 1