VAT and Other Taxes
VAT mechanics
Understand registration (compulsory when taxable turnover exceeds £85,000 in a 12-month period, or expected to exceed in the next 30 days), deregistration, and the taxable supplies categories: standard-rated (20%), zero-rated, reduced (5%), exempt, and outside the scope. Know the difference between output tax and input tax, and the rules on input tax recovery - blocked input tax (entertaining, cars, non-business), and partial exemption for mixed-use businesses.
Accounting and special schemes
Learn the invoice and cash accounting schemes, the flat rate scheme, retail schemes, and the margin scheme for second-hand goods. Understand place of supply (goods and services), reverse charge for construction and cross-border services, and distance selling. Know the time of supply rules and the tax point (invoice or payment, whichever earlier).
Other taxes
Know stamp duty land tax (residential and non-residential rates, first-time buyer relief), stamp duty on shares (0.5%), inheritance tax interaction, and customs duties. Understand PAYE obligations for employers and the apprenticeship levy.
Traps
Questions test the registration threshold arithmetic (rolling 12 months, not calendar year), the flat rate scheme eligibility (limited-cost traders), and partial exemption de minimis limits. Watch the blocked input tax on business entertaining and the treatment of zero-rated versus exempt supplies for recovery.
Rule of thumb: Zero-rated supplies are taxable (so input tax is recoverable); exempt supplies are not, so input tax is generally blocked.