Indirect Tax
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JamesM
Registered Posts: 7
I've went through the first practice assessment and this question has racked my head.
A VAT registered trader makes a mixed supply to customers as follows:
Standard rated items for £683 plus VAT
Zero rated items for £128
An early settlement discount of 2.5% is offered
How much VAT should be included on the VAT invoice?
I've looked at the answers, can anyone explain how you get the figure of £133.18?
Thanks
A VAT registered trader makes a mixed supply to customers as follows:
Standard rated items for £683 plus VAT
Zero rated items for £128
An early settlement discount of 2.5% is offered
How much VAT should be included on the VAT invoice?
I've looked at the answers, can anyone explain how you get the figure of £133.18?
Thanks
0
Comments
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You have to take into account the 2.5% discount when calculating the VAT in this instance.
First take the 2.5% discount from the standard rated items:
£683 - 2.5% = £665.925
Then work out how much VAT should be added to these items:
£665.925 x 20% = £133.18
As the other items are zero-rated, this figure is how much VAT should be included on the VAT invoice.
Hope this helps!0 -
Thanks, I think that that was the only thing I didnt try!0
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The rule is that you always need to take off discount before VAT I am sitting this exam next week and lots to remember!0
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