Box 4 On AAT Practise Assessment

Jay1981

Can someone clarify something for me.
In the online sim for indirect tax, it asks you to calculate the amount to be reclaimed through purchases etc. The AAT don't include the import in their answer, why?

It's task 2.1 question C, if anyone wants to look.

pirate

Because there are no imports in the question only exports

Jay1981

Are non-eu purchases not imports?

Bluewednesday

Oh dear - edited because I should double check the VAT law before I answer!!!

stranger

Jay1981 wrote: »

Are non-eu purchases not imports?

There is no 'Imports' in this paper. The only purchase is the 'UK purchase'.

pirate

Jay1981
I didnt see any purchases only sales to UK and sales to EU and Non EU countries.
I am looking at the practice assessment online

K

Jay1981

pirate wrote: »

Jay1981
I didnt see any purchases only sales to UK and sales to EU and Non EU countries.
I am looking at the practice assessment online

K

Are you sure you're looking at the computer based assessment online? In the purchases account it lists:

PDB - UK purchases £311,000
PDB - EU Acquisitions £12,000
PDB - Imports £34,000

The answer the AAT has is 17.5% of UK and EU purchases and doesn't include the import. I don't understand this as my tutor has given me a handout stating that what goes into box 4 is:- Purchases & expenses VAT minus any Purchase credit notes plus any IMPORT DUTY already paid.

Jay1981

Bluewednesday wrote: »

Non eu purchases are imports but they are outside the scope of VAT. Only EU purchases would appear on the VAT return.

I don't understand, as i've just put to Pirate - according to my notes from my tutor you can reclaim VAT paid on imports in box 4.

Bluewednesday

I had already edited, I should have checked the VAT law first, your tutor is right, I can't see any reason why the import duty wasn't included and i've had a really good search for a reason.

I would be interested to find out if anyone can see why AAT haven't included it.

Jay1981

Bluewednesday wrote: »

I had already edited, I should have checked the VAT law first, your tutor is right, I can't see any reason why the import duty wasn't included and i've had a really good search for a reason.

I would be interested to find out if anyone can see why AAT haven't included it.

The world makes sense again! I may e-mail the AAT directly to ask why.

pirate

hi Jay1981
I think I am looking at the wrong paper have now gone into the assessment.

anyway if VAT is paid on imports it can be reclaimed as imput tax
From the VAT account I cant see any VAT on the imports thats probably why its not there.

would this make sense

Jay1981

pirate wrote: »

hi Jay1981
I think I am looking at the wrong paper have now gone into the assessment.

anyway if VAT is paid on imports it can be reclaimed as imput tax
From the VAT account I cant see any VAT on the imports thats probably why its not there.

would this make sense

This was the reason why I asked the question. The figure shown in the VAT a/c is only the VAT deductible on UK sales (17.5% of £311,000).
It's just very mis-leading, it's an incomplete VAT control a/c but that isn't stated anywhere. Although, to be fair, we should be able to work that out.
But when they get the answer wrong anyway it can leave you more confused and lead to self doubt.

pirate

Hi Jay1981

I don't think they have got it wrong.
The VAT account looks ok to me and is rightly showing VAT on UK sales at 17.5% and VAT on UK purchases at 17.5%
As you can see on the next question there is an import but no VAT on it so it isnt included in Box 4, which is a fully completed VAT return.

Do you get the notes in the actual exam as well, seems very handy if so.

There is a handy set of slides on VAT at this web site http://opentuition.com/aat/unit31/ Unit 31 was the old pathway and covered VAT/Indirect Tax. It's useful as it goes over some of the points for VAT.

HTH

Jay1981

pirate wrote: »

Hi Jay1981

I don't think they have got it wrong.
The VAT account looks ok to me and is rightly showing VAT on UK sales at 17.5% and VAT on UK purchases at 17.5%
As you can see on the next question there is an import but no VAT on it so it isnt included in Box 4, which is a fully completed VAT return.

Do you get the notes in the actual exam as well, seems very handy if so.

There is a handy set of slides on VAT at this web site http://opentuition.com/aat/unit31/ Unit 31 was the old pathway and covered VAT/Indirect Tax. It's useful as it goes over some of the points for VAT.

HTH

But that's just it, the answer they have includes the EU acquisition, but that's not written in the VAT control a/c, why?

Either way, they have something wrong.

pirate

Eu acquistions are different
they are added to the Box 4 and also in Box 2 so it has the affect on cancelling itself out.

Imports are called imports when they are from Non Eu, imports from EU are called acquistions.

Have another look at your notes, its also on the web site I pointed you too

Jay1981

pirate wrote: »

Eu acquistions are different
they are added to the Box 4 and also in Box 2 so it has the affect on cancelling itself out.

Imports are called imports when they are from Non Eu, imports from EU are called acquistions.

Have another look at your notes, its also on the web site I pointed you too

Ah, so what you're saying is that because they appear on both sides (cancelling each other out) the don't put it in the control a/c? Seems odd. They do in the book!

I still don't understand why non EU purchases aren't included in the VAT control a/c.

pirate

Do you mean imports by non EU purhases?
There is no VAT on this particular occassion therefore it is not shown on the VAT Control Account.
VAT on acquisitions from members EU states is Zero rated so may not be in the VAT control account but it has to be added to Box 4 and also Box 2.
The question is to test your knowledge of this.

Jay1981

pirate wrote: »

Do you mean imports by non EU purhases?
There is no VAT on this particular occassion therefore it is not shown on the VAT Control Account.
VAT on acquisitions from members EU states is Zero rated so may not be in the VAT control account but it has to be added to Box 4 and also Box 2.
The question is to test your knowledge of this.

Yes, sorry, Non EU purchases is Imports.

I understand the acquisition part now, thank you.

The problem I have with the import is that VAT is charged on ALL imports at the docks/airport etc. So why not claim it back?

Jay1981

The first paragraph here explains what i'm getting at:

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073790602&type=RESOURCES

pirate

Hi Jay1981
yes I understand what you are getting at, and I agree. Trading with other counties is a really complex area with lots of declarations and so on. I am thinking of the examination itself and what is expected you see.
The problem for me is that when I studied VAT although we covered trading outside of EU we were not expected to learn the complexities of trading with EU and Non EU countries. But now you have a specific exam subject in it (when I did it it was part of a whole section of other stuff) The exam looks fairly straightforward, so wouldnt expect them to necesarily test you on this. However as you suggested it is probably worth checking if this is something that is likely to be tested on and have they got it wrong in this case.
Report back what you find

Jay1981

pirate wrote: »

Hi Jay1981
yes I understand what you are getting at, and I agree. Trading with other counties is a really complex area with lots of declarations and so on. I am thinking of the examination itself and what is expected you see.
The problem for me is that when I studied VAT although we covered trading outside of EU we were not expected to learn the complexities of trading with EU and Non EU countries. But now you have a specific exam subject in it (when I did it it was part of a whole section of other stuff) The exam looks fairly straightforward, so wouldnt expect them to necesarily test you on this. However as you suggested it is probably worth checking if this is something that is likely to be tested on and have they got it wrong in this case.
Report back what you find

I think clarification from the AAT is needed, i'll e-mail them in the morning.
We're taught to reclaim the VAT on imports at the standard rate (unless otherwise told). The AAT (in the mock answers) haven't reclaimed it at all. Confusion No1.

Then; They reclaim on acquisitions but don't include the figure in the VAT control a/c, which is something we're taught to do and is in the book (BPP). Confusion No2.

I hate half term! No tutor to ask and the next time i see him will be an hour before the live exam!!!
But thank you for your answers, you've stopped me from going mad.

Jay1981

Well, turns out that if there's no entry in the VAT a/c we're to assume the imports are zero rated.

Strange though, that I did the exam today and in the purchase a/c it listed ZERO RATED imports!! Why not just do that in the mock and save the (my) confusion?

pirate

Hi Jay1981

they might have had some feedback to avoid any such confusion.
I thought it would be simpler at this level, however I know why my tutors I get more complicated questions and assessments than on the real thing, in order to prep me for any eventuality
Did you pass the exam

Jay1981

I did pass, thanks for asking. My tutor tries to do the same, teaches us more than we'd need to know (for exam purposes at least).

This thread can now be chucked on the trash heap of history!

pirate

Hey Jay1981

well done on the pass

Think the thread useful for others if they have the same concern

K