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33. VAT (a)
Traders become liable to register for VAT if at the end of any month the value of taxable
supplies in the previous 12 months exceeds £85,000, or if the value of the taxable supplies to
be made in the next 30 days will exceed £85,000.
Kite Ltd will therefore be liable to register for VAT from 28 February 2023 (27,000 + 30,000 +
30,000 = 87,000), and the trader must notify HMRC by 30 March 2023. Kite Ltd will be
registered from 1 April 2023.
(b) VAT Return - Quarter ended 31 December 2022 Notes 1.
The calculation of output VAT will only take into account the discount for prompt payment if
customers take it.
2.
Input VAT on entertaining UK customers cannot be reclaimed.
3.
Relief for an irrecoverable debt is not given until six months from the time that payment is due.
4.
Input VAT on motor cars not used wholly for business purposes cannot be reclaimed.
£ £ Output VAT Sales
(240,000 x 50% x 20%) + (240,000 x 50%
×
95% (100% - 5%)
×
20%)
46,800
Input VAT Purchases and expenses (71,280 - 960 = 70,320
×
20%)
14,064
Irrecoverable debt (4,000 x 20%)
800
Machinery (42,300
×
20/120)
7,050
(21,914)
VAT payable 7 February 2023
24,886
