Box 4 On AAT Practise Assessment

Jay1981
Jay1981 Registered Posts: 36 Regular contributor ⭐
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.

Comments

  • pirate
    pirate Registered Posts: 469 Dedicated contributor 🦉
    Because there are no imports in the question only exports
  • Jay1981
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    Are non-eu purchases not imports?
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
    Oh dear - edited because I should double check the VAT law before I answer!!!
  • stranger
    stranger Registered Posts: 12 New contributor 🐸
    Jay1981 wrote: »
    Are non-eu purchases not imports?

    There is no 'Imports' in this paper. The only purchase is the 'UK purchase'.
  • pirate
    pirate Registered Posts: 469 Dedicated contributor 🦉
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    pirate Registered Posts: 469 Dedicated contributor 🦉
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    pirate Registered Posts: 469 Dedicated contributor 🦉
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    pirate Registered Posts: 469 Dedicated contributor 🦉
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    pirate Registered Posts: 469 Dedicated contributor 🦉
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    The first paragraph here explains what i'm getting at:

    http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073790602&type=RESOURCES
  • pirate
    pirate Registered Posts: 469 Dedicated contributor 🦉
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    pirate Registered Posts: 469 Dedicated contributor 🦉
    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
    Jay1981 Registered Posts: 36 Regular contributor ⭐
    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
    pirate Registered Posts: 469 Dedicated contributor 🦉
    Hey Jay1981

    well done on the pass

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

    K
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