Accounting schemes

The cash accounting scheme allows businesses to account for VAT when payments are made or received rather than when invoices are issued.

Is this true or false?

Please select one answer:

• True

• False

Melanie buys goods from Harry. She receives the goods on the 10th July, receives an invoice on the 15th July, and pays for the goods on the 31st August. Melanie is registered under the cash accounting scheme.

When is the tax point?

Please select one answer:

• 10th July

• 15th July

• 31st August

If a business operates the cash accounting scheme on its own, it will file its VAT returns …

Please select one answer:

• annually

• monthly

• quarterly

• bi-annually

The flat rate scheme might not be suitable for a business that makes ...

Please select all that apply: (2)

• mainly standard-rated supplies.

• mainly reduced-rated supplies.

• mainly zero-rated supplies.

• mainly exempt supplies.

Alexander runs a small business offering ironing and clothing repairs. All services are charged at standard rate. The business’s annual turnover is £90,000, therefore it is eligible for the flat rate scheme.

Is this true or false?

Please select one answer:

• True

• False

Sandreen works as a bookkeeper. Her office is one of the rooms in her home. Her turnover is £86,100 excluding VAT and her business costs are £2,000 including VAT.

If Sandreen is registered on the flat rate scheme for VAT, what rate of VAT must she use?

Please select one answer:

• 10%

• 14.5%

• 16.5%

• 18.5%

Under the annual accounting scheme VAT is paid in full at the end of the VAT year.

Is this true or false?

Please select one answer:

• True

• False

If a business on the annual accounting scheme makes payments on account that total more than the amount of VAT due for the year, when can it apply for a refund?

Please select one answer:

• during the year

• at the end of the financial year

• at the end of the VAT year

• at the beginning of the year

Michelle has a company car that she uses to travel from home to the office and to various customers and suppliers around the UK. The company can claim the VAT back on the purchase of the car.

Is this true or false?

Please select one answer:

• True

• False

Tresso Ltd has a number of company cars which are used by employees for both personal and business journeys. Employees are all provided with fuel cards and the business pays the full cost of the fuel each month. Employees do not keep detailed records of mileage and the business claims all the VAT on the fuel purchased.

What must Tresso Ltd do to comply with VAT rules on motor expenses?

Please select one answer:

• Pay a fuel scale charge

• Pay a fuel surcharge

• Collect a percentage back from the employees

• Not claim any VAT back on the fuel