Indirect Tax question - Basic and Actual Tax Points

AATchick

Hi All,

I know this is something that people will find really easy but I just can't seem to get my head around the learning for Basic Tax Points and Actual Tax Points. I know that when goods are supplied, the Basic Tax Point is the date of physical supply, i.e.; the date the goods are sent to the customer or made available to the customer and that Basic Tax Points are overidden if there is an Actual Tax Point. An actual tax point is created if the date of the invoice or the payment is the Actual Tax Point - whichever happens first.

So I have this question in my BPP book: " A business sends goods to a customer on 15th May. The VAT invoice is then sent later and is dated 20th May. The customer paid the invoice 20th June. What is the Tax Points for these goods?
A= 15th May
B= 20th May
C= 20th June

Now apparantly is the answer is B = 20th May, but I don't see how as the goods were issued on 15th May and isn't this the basis for Basic Tax Points? Or is it because it's now an Actual Tax Point and is now overidden?

I'm sorry if this seems dumb but I just can't get my head around it!

AATchick x

Nps

Yes, you've answered your own question! It's because an invoice was issued within 14 days of the basic tax point, hence creating an actual tax point, which overrides the basic tax point.

AATchick

Thanks Nps1976, I knew I was having an off day! I have a horrible cold at the moment so I'm blaming that! x

Nps

Oh isn't it horrible trying to study whilst ill and your brain feels like cotton wool!

mentorkeith

I understand the confusion over basic tax point date and actual tax point date. It used to drive me bonkers. I came up with a solution that helped me. It could help you. Drop the word "basic taxpoint" altogether, it is vitually irrelevant anyway. Instead call it "delivery date". The delivery or supplied date is the taxpoint date normally, unless the supply was paid for before delivery or the invoice is dated within 14 days of the delivery.

Does that make more sense? Go back to your book and change the word "basic taxpoint" to delivery date and then read it again.

hbapu191

mentorkeith said:

I understand the confusion over basic tax point date and actual tax point date. It used to drive me bonkers. I came up with a solution that helped me. It could help you. Drop the word "basic taxpoint" altogether, it is vitually irrelevant anyway. Instead call it "delivery date". The delivery or supplied date is the taxpoint date normally, unless the supply was paid for before delivery or the invoice is dated within 14 days of the delivery.



Does that make more sense? Go back to your book and change the word "basic taxpoint" to delivery date and then read it again.

Thanks Mate!!