Question 1

Section B: Case 1 - QuantumLeap VR Ltd

Scenario: QuantumLeap VR Ltd is a virtual reality software developer. The company began trading on 1 January 2023. Its taxable turnover was £6,000 per month for the first 10 months. In November 2023, it secured a major contract, and taxable turnover jumped to £30,000 for November and £30,000 for December.

Question: QuantumLeap VR Ltd is considering joining the VAT Cash Accounting Scheme to help with cash flow. What is the turnover limit for JOINING the Cash Accounting Scheme?

Accepted Answer

Recall the specific turnover thresholds for VAT schemes. The Flat Rate Scheme is £150k. The Cash Accounting and Annual Accounting schemes have a joining threshold of £1.35 million.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Confusing the joining limit (£1.35m) with the leaving limit (£1.6m) or the Flat Rate Scheme limit (£150k).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 5

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