Question 7 (answer both parts (a) and (b)): Polo Ltd is registered for Value Added Tax (VAT) and sells clothing items to small local shops. The company's financial accountant is in the process of completing the VAT return for the quarter ending 31 December 2020. The following information relates to the quarter ending 31 December 2020: (a) Sales invoices totalling 37,370 (VAT inclusive) were issued to customers for standard- rated sales. (b) Sales invoices totalling 20,815 were issued to customers relating to zero-rated sales. (c) Purchase invoices relating to standard-rated costs totalled 21,570 (VAT exclusive). (d) Purchase invoices relating to zero-rated items totalled 12,850. (e) The company purchased a new delivery van on 30 December 2020, which cost 8,900 (VAT inclusive at standard rate). The purchase invoice is dated 30 December 2020. However, Polo Ltd did not pay the invoice until 10 January 2021. Required: (a) Calculate the amount of VAT payable by Polo Ltd for the quarter ending 31 December 2020. 10 marks (b) The company accountant is considering using the Annual Accounting VAT Scheme next year. Prepare a short report, advising the accountant of: i. the conditions the company must satisfy to qualify for the Annual Accounting VAT scheme; ii. the advantages and disadvantages of using the scheme; and iii. how the company must calculate its VAT liability and when this must be paid to the tax authority. 10 marks (Total marks for question 7: 20 marks)