- 15 Marks
Question
Zuba Construction Company Limited is an irrigation and building construction company. The company has been in the business for many years.
The company appointed you as the tax representative to provide tax advisory services and deal with the VAT office on its behalf.
On commencement of your assignment, you discovered that there was a dispute on the determination of the amount of VAT payable to the Revenue by the Company. To assist you in the assignment, the following information was made available to you:
| Date | Details | Amount (N) |
|---|---|---|
| 1/8/13 | Bought a concrete mixer | 700,000 |
| 2/8/13 | Bought sand | 40,000 |
| 3/8/13 | Bought gravel | 40,000 |
| 5/8/13 | Bought scaffolding | 1,800,000 |
| 5/8/13 | Bought photocopier machine | 50,000 |
| 7/8/13 | Bought tables | 15,000 |
| 14/8/13 | Bought poker vibrator | 300,000 |
| 14/8/13 | Bought chairs | 20,000 |
| 14/8/13 | Progress payment received | 2,000,000 |
| 24/8/13 | Progress payment received | 1,500,000 |
Additional Note: VAT was paid on all the company’s purchases.
You are required to:
a. Compute VAT payable (if any) for the month of August 2013.
(8 Marks)
b. Advise your client on when and how VAT payment should be made.
(4 Marks)
c. Itemize the contents of a Notice of Appeal against VAT Assessments.
(3 Marks)
Answer
(a) ZUBA CONSTRUCTION COMPANY LIMITED
Computation of Valued Added Tax Payable for the Month August 2013
(b) DUE DATE FOR PAYMENT OF AUGUST 2013 VAT
APEX CONSULTANTS
(CHARTERED ACCOUNTANTS AND CHATERED TAX PRACTITIONERS)
30, Orange Street, Lagos
The Managing Director
Zabu Construction Company Limited
Plot 15, Moonlight Estate
Lagos
Dear Sir,
RE: DUE DATE AND MODE OF PAYMENT OF AUGUST 2013 VAT
We refer to your request on the above subject.
Please be informed that according to the provisions of the VAT Act, the due date
for the payment of monthly VAT is on or before the 21st day of the month
following the month of the transaction for which VAT is due.
Therefore, the due date for payment of VAT for the month of August 2013 should
not be later than the 21st day of September 2013.
You are to remit the VAT to the FIRS through designated Banks. An electronic
receipt i.e. e-receipt would be issued as soon as payment is made. The e-receipt
and completed VAT form 002 shall be submitted at the FIRS office not later than
the due date for submission of VAT returns i.e. 21st day of the month following
the month of the transaction.
Please note that failure to comply with the above date would result in the
imposition of a penalty of N
5,000 for every month the failure continues.
May we use this opportunity to enclose our bill in respect of the services
rendered.
Thanking you for your continuous patronage.
Yours faithfully,
Okolo Richard
Managing Partner
For: Apex Consultants
(c)
CONTENTS OF A NOTICE OF APPEAL AGAINST VAT
The contents of a Notice of Appeal against VAT are as follows:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
The name and address of the taxable person
The total number of goods and services chargeable to tax in respect of
each month
Any input tax
Net amount of tax payable
The copy of assessment notices
The precise grounds of appeal against the assessment
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