ACCA · Question 18 · Value added tax (VAT)
Section B - Case 1: Nimbus SaaS Ltd
Nimbus SaaS Ltd is a UK-based tech startup providing cloud software subscriptions. The company supplies digital services to both B2B (business) and B2C (consumer) clients globally.
Nimbus also provides some exempt financial software services. In the current VAT quarter, its total input VAT is £20,000. Of this, £18,500 relates to taxable supplies, £1,000 relates to exempt supplies, and £500 is residual. The residual input VAT is apportioned 60% to taxable supplies. Can Nimbus recover the input VAT related to its exempt supplies under the de minimis rules?
Answer options:
No, because any exempt input VAT is strictly irrecoverable.
No, because the total exempt input VAT exceeds £625 per month.
Yes, because the total exempt input VAT is not more than £1,875 per quarter and is not more than 50% of total input VAT.
Yes, because the residual input VAT is mostly taxable.
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