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ITAX
ITAX TERMINOLOGY
| Term | Definition |
|---|---|
| VAT | Indirect Tax on consumer spending |
| Taxable Persons | businesses which are (or should be) registered for VAT. |
| Taxable Supplies | Mainly sales made by a taxable person |
| Output Tax | The VAT charged on sales or taxable supplies |
| Input Tax | VAT paid by a business on purchases or expenses |
| Taxable Supplies | Supplies for which VAT is applied |
| Exempt Supplies | Supplies that the law states should not have VAT charged on them |
| Outside the scope | VAT is not applied |
| Zero Rate | Tax rate of nil |
| Standard Rate | Taxable supplies at 20% |
| Reduced Rate | Domestic and charitable supplies |
| VAT Act 1994 | Main source of law on VAT |
| HMRC | Government body that is responsible for administering VAT |
| HMRC Publications | VAT related material |
| VAT Guide 700 | Guide to VAT rules and procedures |
| VAT notes | Quarterly bulletin |
| Compulsory Registration | Businesses that have taxable supplies exceeding the registration threshold that have to register under the compulsory registration rules |
| Exemption from Registration | A trader making only zero-rated supplies can apply for exemption from registration |
| Deregistration | A person must deregister when he ceases to make taxable supplies |
| Effect of Deregistration | On deregistration, VAT output tax must be paid over on the value of capital assets and inventory owned at the date of deregistration |
| Tax point | The date on which the liability for output tax arises |
| Basic Tax Point | The date when goods are removed |
| Actual Tax Point | A tax invoice is issued or a payment is received on or before the basic tax point |
| 14 Day Rule | A tax invoice is issued within 14 days after the basic tax point |
| Simplified VAT Invoice | Invoices with fewer details if the value of the supply is below a certain limit. |
| Partial Exemption | A taxable person who makes both taxable supplies and exempt supplies is referred to as a partially-exempt trader |
| VAT Refund | If the business has more input tax than output tax in a particular VAT period, then it will be due a refund |
| Annual Accounting Scheme | Only one VAT return is submitted each year, but VAT payments must still be made regularly |
| Cash Accounting Scheme | A business accounts for VAT on the basis of when payment is actually received from customers or made to suppliers |
| Flat Rate Scheme | A business calculates the VAT liability by simply applying a flat rate percentage to total VAT-inclusive turnover |
| Tax Avoidance | Arranging your tax affairs, using legal methods, so that you pay less tax. |
| Tax Evasion | Using illegal methods to reduce tax due |
| Ethical Implications | Members must not assist a client to plan or commit an offence |
| Penalties | Standard penalty, default surcharge, immediate payment of VAT and error correction |
| VAT Return | Summarises all the transactions for the period |
| VAT Account | main source of information for the VAT return |
Created by:
donnaowen
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