Melinda has a VAT registered business in Dublin and her turnover comes from both taxable, (accountancy services) and exempt (financial services), supplies. For the year ended 31 December 2020, she made taxable supplies of €120,000 excluding VAT at the 23% rate and exempt supplies of €60,000. The input VAT for her business for the same period was as follows: Input VAT wholly attributable to taxable supplies €25,500 Input VAT wholly attributable to exempt supplies €1 ,750 Input VAT relating to light and heat for her premises €550 The following information is also relevant: Melinda purchased a computer from a local computer shop for €750 including VAT 23%. The shop gave Melinda a till receipt for this purchase, but it only shows the gross amount and no VAT invoice was provided. 

REQUIREMENT: 

(a) Advise Melinda’s as to what her VAT liability is, including advice on the treatment of the computer purchase. 

(b) (i) Melinda has recently become aware of the system of accounting for VAT on an invoice basis as opposed to a cash basis, which she currently does. Advise Melinda as to what the specific drawbacks are, of being VAT registered on an invoice basis. 

(ii) Include in your discussion how bad debts are dealt with. 

(c) Advise on the VAT treatment if she exports goods to VAT registered persons in other EU countries.  

(d) Advise on the VAT treatment to a private individual who is located in the EU. Suggest when voluntarily registering for VAT, earlier than necessary, in the foreign EU country would be beneficial.

Answer rating: 100% (QA)

a Melinda should charge VAT at the relevant rates As Melinda has a taxable turnover in excess of 75000 she must register for VAT Therefore Melindas ta... View the full answer