First Previous - Page 1 of 1 - Next Last

Level II computerised exam - does the report dates matter?

  • 3 posts
  • # 70145

I've moved this to the right section under 'taking exams' - I think! Foot in mouth



Edited at 11 Apr 2011 10:41 AM GMT

  • 15 posts
  • # 70349

Hello

Does anyone know why Rent is T2 .  I know T2 is exempt but it needs to be in T2 code when entering the transaction because of Vat.  If entered in T9 it won't get analysed.  I think that there is another reason to that , that I can't remember.  Could someone refresh my memory please?

Is it something like the person receiving the Rent can claim the VAT but the one paying the rent can't.  Can't remember at all.

Also Postage is also considered as T2 why is that?


Edited at 23 Apr 2011 06:28 PM GMT

  • Member PM.Dip
  • Practice Licence
  • 10 posts
  • # 70485

Good Morning FAKS

Your query prompted my student curiosity.  The following information was mostly obtained from the HMRC website.

Firstly not all rent is VAT exempt.  For example holiday accommodation is at standard rate VAT, as are hotel accommodation and camping sites!

It also appears that in some cases businesses renting out premises can opt to tax their rent at standard rate VAT.   Apparently a few years ago some breweries opted to add VAT to the rent they charged their self-employed pub tenants.   The issue was that if the rent the brewery received was VAT exempt, then the brewery was not able to recover the VAT they paid on any repairs and maintenance to the pub premises.   Therefore they charged VAT on the rent income and claimed back the VAT on repairs as input tax.   The pub tenants in turn were able to reclaim the VAT they paid the brewery as input tax.  Is this the situation you are trying to recall?  

Rent would be designated T2 in SAGE if it is VAT exempt.   If you used T9 instead (beyond the scope of VAT) the VAT payable to HMRC would be calculated correctly, but the total value of sales which SAGE enters  in box6 of the VAT return would be wrong.   SAGE (I think) ignores any sale marked T9 when if calculates total value of sales for the VAT return (unless you change the default settings for tax codes).   However sales designated T2 are included in the box 6 figure.

Postage is VAT exempt only if it is through the official Post Office service (e.g. cost of postage stamps is VAT exempt).  However courier / parcel services in the private sector are standard rated.   I also believe that the cost of postage included in the charge for standard-rated goods sent by post may have to be standard rated on the invoice.

Regards

First Previous - Page 1 of 1 - Next Last
bottomBanner
loading