The following information relates to the VAT return of the ACME Ltd for the three months to 30 September 2021. All figures are VAT-exclusive unless stated otherwise.

1. Standard rated supplies made to customer were 60,000. A cash discount of 10% was offered to customers who paid within 30 days and customers who bought 60% of the supplies made during the quarter took this discount.

The figure of 60,000 includes a 5,000 sale, which was made to a customer in August 2021. This customer went bankrupt in September 2021 and had a bad debt of 5,000 was written off in the companys book on 30^th September 2021.

On 20^th September 2021, a customer was invoiced for 8,000 in relation to a sale of standard rated goods. These goods were paid for on 4^th October 2021 and were made available to customers to the customer on 10th October 2021. This sale is NOT included in the above figure of 40,000 and was not eligible for cash discount.

2. Standard-rated goods bought for resale or consumption cost 15,280. Standard-rate services cost 10,200.
3. On 1^st July 2021, the company was charged VAT of 3,000 on the purchase of motor car with emissions of 160g/km. Private use of this car by one of the employee accounts for 60% of the mileage. Maintenance charges in relation to the car were 500 for the quarter and fuel cost were 720. The company reclaims input tax on all car fuel.

**For 160gm/km for a three-month period fuel scale charge is 321.

Required:

1. Compute the VAT payable to (or Repayable by) HMRC for the three months to 30^th September. (15 marks)

2. Explain the main features and advantages of joining Cash accounting scheme

(10 marks)

(Total 25 marks)