Indirect Tax Assignment (Doc)

INDIRECT TAX

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1. Identification of sources of VAT information.....................................................................1
1.2. Interaction of organisations with relevant government agency...........................................1
1.3. VAT Registration Requirements.........................................................................................2
1.4. Identification of information included on business documentation of VAT registered
businesses....................................................................................................................................3
1.5. Requirements and Frequency of reporting VAT schemes...................................................4
1.6. Maintaining up-to-date knowledge of changes to codes of practice, regulation or
legislation....................................................................................................................................4
TASK 2............................................................................................................................................5
2.1 Extract relevant data for a specific period from the accounting system...............................5
2.2 Calculation of inputs and outputs using VAT classifications...............................................5
2.3 Calculation of VAT due to, or from the relevant tax authority.............................................6
2.4. VAT return and associated payment within the statutory time limits..................................7
TASK 3............................................................................................................................................8
3.1 Implications and Penalties for an organisation Resulting from Failure to Abide by VAT
Regulations..................................................................................................................................8
3.2. Adjustments and Declarations for Errors or Omissions Identified in Previous VAT
Periods.........................................................................................................................................9
TASK 4..........................................................................................................................................10
4.1. Informing Managers about the Impact of VAT Payment on an organisation's Cash Flows
and Financial Forecasts.............................................................................................................10
4.2. Advising People about Changes in VAT Legislation's Effect on Organisation's Record
Keeping System........................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERNCES.................................................................................................................................12

INTRODUCTION
Indirect Tax refers to the amount collected by an entity present in the supply chain, for
instance, a producer or retailer, which in turns get paid to government (Wang, Caminada and
Goudswaard, 2012). This amount is paid by customers on purchase of the company's offerings.
The most prominent example of indirect tax is the Value Added Tax.. The report covers a
detailed understanding of VAT regulations and calculation of VAT returns in a timely and
accurate way. It also includes a detailed discussion of VAT penalties and various adjustments for
previous errors and communication of VAT information within the organisation.
TASK 1
1.1. Identification of sources of VAT information
Value Added Tax is a form of indirect tax which is placed on a company's offerings
whenever a specific value is added at stages of supply chain, i.e., from production to ultimate
sales of the product. Within the UK government, there are various sources which provide
effective information on VAT.
One such source of information is Value Added Tax Act, 1994. This act within the
country is related with VAT and provides effective information on this aspect which provides
effective information on the same. In addition to this, there are various provisions that are
covered under this act which are required by companies to comply with to effectively manage
VAT within their organisation.
Another source of information is government websites, which consists of online portals
where individuals as well as organisations could collect information related to VAT. These sites
provide information about the changes that take place each year in the acts associated with VAT,
which are necessary for the organisation be updated with (Sterner, 2012).
Another source by which organisations could get effective VAT information are the
journals that are issued by government and various taxation agencies which could provide the
organisation with the data and information on how the firm could effectively manage, calculate,
collect and pay VAT to the government.
1.2. Interaction of organisations with relevant government agency
It is imperative for any organisation to effectively interact with various government
agencies to gain a better understanding on how to develop a legal framework of managing and

filing indirect taxes. One such government organisation is Her Majesty's Revenue and Customs
which is a department within the UK which undertakes collection of taxes as well as
administration of various other regulatory regimes which also includes National Minimum
Wage.
There are various ways in which companies could interact with this organisation
regarding indirect taxes. This entity has its own website which enlists information about various
taxes and systems that are required by companies to perform ethical work frame regarding the
taxation system. The company could use this website to interact with this organisation regarding
various queries associated with filing of taxes. In addition to this, the company has postal service
too which allows the firms to interact the officials of this agency via formal letters where the
company could receive formal notices from the agencies regarding information associated with
their taxation (Pradhan and Ghosh, 2012).
Within the website there are details of the operative timings of the company throughout
the week where the agency is functional and open for interaction. Such information could be
quite useful for organisation so that they could approach the agency within in an appropriate and
timely manner.
1.3. VAT Registration Requirements
For any functional organisation, it is imperative that it be acquainted with various
requirements that are necessary for VAT registration. These requirements are necessary to be
complied by the organisation for appropriate filing of VAT returns. Within UK, it is crucial for
companies to register its business with HMRC for VAT in case the VAT taxable turnover of the
company gets more than £85,000. It is required by the firm to charge right amount of VAT and
effectively submit their VAT returns. In addition to this it is needed by the company to keep their
VAT records as well as VAT account (Penu, 2016).
There are two types of methods which are required to be considered by companies for
their VAT registration. These methods are as follows: Compulsory Registration: It is essential and compulsory for firms to register for VAT if
the firm expects its VAT taxable turnover to be higher than £85,000 in a period of next 30
days or if the VAT taxable turnover be more than the this amount over the past 12
months. It is also required for the firm to register even if it sells goods that are exempted