indirect tax

Morning All

Currently doing the engage mock as I have exam this week for indirect tax. one of the questions is on flat rate vat and is as follows

A business has recently been admitted to the flat rate scheme, and has been allocated a flat rate percentage of 12%. In the next VAT return quarter the value of its total sales and purchases were £30,000 and £4,000 respectively. Both figures are stated exclusive of VAT. How much VAT will be payable to HMRC in respect of this quarter? Choose ONE answer.

answers are


I got this to be £3120 but was marked wrong, It gives the answer as £4230 - can someone explain why?




  • AK002
    AK002 Registered Posts: 2,492
    I got £4,230.

    The £30,000 is NET of VAT, you apply the Flat Rate percentage to your gross sales for the quarter.

    So add 17.5% on to the £30,000 then take your 12%.

    Also, the Flat Rate Scheme means you only pay VAT on a percentage of your sales.. So the purchases g
    Figure is irrelevant in this case, unless it states that the purchase is for a fixed asset addition.

    I can't put the figures down cause I'm on my phone lol.

    Hope this helps...
  • donnas1977
    donnas1977 Registered Posts: 182 ? ? ?
    thanks, it did help and now i get the correct answer :)
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