assessment wrong?
beancounter
Registered Posts: 5
Question 1.7 on the PBKT sample asssessment 1 - Why is it saying that the discount applied is wrong? And on the answer sheet is says the vat is 245... WHY?! The correct vat (20%) of 250 is 50...
Please help me find a way out of my stupidity
Thanks
beancounter
Please help me find a way out of my stupidity
Thanks
beancounter
0
Comments
-
Hi,
It is due to the settlement discount of 10%. Where there is discount (bulk, trade and early settlement), the discount is deducted from the net value leaving the following equation £250.00*10%=£25.00
£250.00-£25.00=£225.00
£225.00*20%=£45.00
£250.00 Net
£45.00 VAT
£295.00 Gross
I hope this helps.
Remember, if there are also Bulk and Trade discounts they should be deducted before deducting settlement discounts.3 -
Please can you help me?
I thought that BenA's very good point has not been valid since 1st April 2015
This is the HMRC Revenue and Customs Brief 49 (2014): VAT - Prompt Payment Discounts
https://www.gov.uk/government/publications/revenue-and-customs-brief-49-2014-vat-prompt-payment-discounts/revenue-and-customs-brief-49-2014-vat-prompt-payment-discounts
My understanding was that until 1st April 2015 the calculation of VAT was exactly as BenA presented above.
But that since then, the customer is required to pay 20% of the invoiced amount as VAT.
For instance, nowadays the example here would be:
If the customer meets the early settlement criterion
£225.00 + £45.00 VAT = £270.00
If the customer does not meet the early settlement criterion
£250.00 + £50.00 VAT = £300.00
For implications for sage see
http://www.smithcooperit.co.uk/important-changes-early-settlement-discount-legislation/
Have I misunderstood the question?
Yours
Sandy
Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
Hi Sandy,
I wasn't aware of the change .
After reading the update you are right in what you have said0 -
BenA
I read this thread
http://forums.aat.org.uk/discussion/443060/early-settlement-discount-finance-act-2015#latest
If the contributor is correct. [I have every reason to think he/she is correct] then from the point of passing exams, candidates should continue to make their calculations in the way you described.
But if they go to work they should do it the way I described.Sandy
sandy@sandyhood.com
www.sandyhood.com0 -
Cheers BenA! Cheers Sandy!0
Categories
- All Categories
- 1.2K Books to buy and sell
- 2.3K General discussion
- 12.5K For AAT students
- 318 NEW! Qualifications 2022
- 161 General Qualifications 2022 discussion
- 11 AAT Level 2 Certificate in Accounting
- 56 AAT Level 3 Diploma in Accounting
- 87 AAT Level 4 Diploma in Professional Accounting
- 8.8K For accounting professionals
- 23 coronavirus (Covid-19)
- 272 VAT
- 92 Software
- 273 Tax
- 135 Bookkeeping
- 7.2K General accounting discussion
- 200 AAT member discussion
- 3.8K For everyone
- 38 AAT news and announcements
- 345 Feedback for AAT
- 2.8K Chat and off-topic discussion
- 582 Job postings
- 16 Who can benefit from AAT?
- 36 Where can AAT take me?
- 42 Getting started with AAT
- 26 Finding an AAT training provider
- 48 Distance learning and other ways to study AAT
- 25 Apprenticeships
- 66 AAT membership