Test Your Tax Knowledge With This Quiz

Explanation
The current 20% rate of VAT was implemented on 4th January 2011.

Explanation
The correct answer is because it's a legal person. This is because being a legal person is a requirement for a company to be considered a VAT taxable person. Being a legal person means that the company has a legal identity separate from its owners or shareholders, allowing it to enter into contracts, own property, and be held liable for its actions. This legal status is necessary for the company to fulfill its tax obligations, including paying VAT taxes.

Explanation
Individual income tax is the largest source of government revenues because it is a tax imposed on the income of individuals, including wages, salaries, and other earnings. This tax is collected by the government and used to fund various public services and programs. It is typically one of the main sources of revenue for governments around the world, as it is levied on a large portion of the population. Corporate taxes and VAT (Value Added Tax) are also significant sources of government revenues, but individual income tax tends to contribute the most to the government's income.

Explanation
Income-tax is a progressive tax because it is based on the principle of ability to pay. This means that individuals with higher incomes are required to pay a higher percentage of their income as tax, while those with lower incomes pay a lower percentage. The tax rate increases as the income level increases, resulting in a progressive tax system. This helps to redistribute wealth and reduce income inequality by placing a greater burden on those who can afford to pay more. Sales tax and customs duty, on the other hand, are regressive taxes as they impose the same tax rate on everyone, regardless of their income level.

Explanation
The reason Anchor doesn't recover VAT on most of its purchases is because most of its sales are not VATable. This means that the products or services it sells are exempt from VAT, so there is no VAT to recover on the purchases it makes.

Explanation
VAT does apply to e-books in the UK. As of 1st May 2020, e-books and digital publications are subject to a reduced VAT rate of 0% in the UK. This means that no VAT is charged on the sale of e-books. Therefore, the given answer "False" is incorrect.

Explanation
Suppliers registered outside the UK will not included VAT on their invoices (if it is included, we would not pay it to them), however in our VAT return we must account for the purchase and pay the VAT to HMRC under the reverse charge process.
There is also a domestic reverse charge for certain items e.g. bulk mobile phone purchases.

Explanation
Charities still need to complete a Corporation Tax return and can, like Anchor, have non-charitable income that could be taxed.
Anchor has not paid Corporation Tax in recent years due to other allowable losses / expenses used against the non-charitable income.

Explanation
On the biscuit front, only chocolate coated biscuits are classed as luxuries. Chocolate coated cakes are still "essentials".
Chocolate chip cookies are viewed as "essentials" by HMRC and are charged VAT at 0%.Sweets are obviously luxuries so are all standard rated.

Explanation
Tax can be very interesting with many subtle nuances - and for those days when it's getting a little mundane, there's always Jaffa Cakes.