In a VAT quarter a business has output VAT of £24,000 and input VAT of £8,400 on purchases. All amounts relate to standard-rated supplies. What is the VAT payable?
Answer and explanation
Correct answer: B. £15,600 payable to HMRC
- Step 1: Output VAT is charged on sales and input VAT is recoverable on purchases.
- Step 2: VAT payable = £24,000 - £8,400 = £15,600.
Answer
£15,600 payable to HMRC.
Why not the others: £32,400 adds the input VAT to the output VAT. The output exceeds the input, so the business pays HMRC. £8,400 is the input VAT only.
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