Sanjay began trading on 1 February 2020, selling standard-rated goods and services. He decided not to register
Question:
Sanjay began trading on 1 February 2020, selling standard-rated goods and services. He decided not to register for VAT voluntarily. His taxable turnover (excluding VAT) for the first 16 months of trading was as follows:
In January 2021, he sold some machinery (which had been used as a non-current asset) for £800. This is not included in the above turnover figures.
Sanjay is concerned that his monthly turnover has started to fall and he is considering offering customer discounts in an attempt to reverse this trend.
Required:
(a) Explain the term "taxable person" for VAT purposes.
(b) State the circumstances in which VAT registration is compulsory and explain why some persons may choose to register voluntarily.
(c) State the date by which Sanjay would be required to register for VAT. Would this be necessary if his monthly turnover for the remainder of 2021 seemed likely to continue on a downward trend?
(d) Explain the VAT consequences which would ensue if Sanjay began offering trade discounts or cash discounts to his customers.
Transcribed Image Text:
2020 February March April May June July August September October November December 2,550 3,660 3,880 4,240 4,860 5,290 5,430 6,320 7,410 11,050 12,270 2021 January February March April May 10,080 7,920 6,780 5,100 4,890
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a A taxable person for VAT purposes refers to an individual or entity that is obligated to charge and collect Value Added Tax VAT on the goods and ser...View the full answer
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