Question 1

Section A

'Oak & Iron', a bespoke furniture maker, issued a standard-rated invoice for £2,400 (inclusive of VAT) on 10 May 2023. The payment was due on 9 June 2023. The customer went into liquidation and never paid.

What is the earliest date 'Oak & Iron' can claim VAT bad debt relief, and how much can they claim?

Accepted Answer

Determine the date 6 months from the payment due date. Then extract the VAT element from the gross invoice amount using the VAT fraction (1/6).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Calculating 6 months from the invoice date instead of the due date, or multiplying the gross amount by 20% instead of using the 1/6 fraction.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 3

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