Bookkeepers’ Club
Tuesday 4th December 2012
Presentation by
Peter Brassington
Top Tips for Handling VAT
(Common VAT Errors Explained)
VAT Registration
Voluntarily
registering
for VAT
Calculating
when you
have to
register for
VAT
Preregistration
VAT
entitlement
Voluntary Registration
• Size doesn’t matter
• Misconception “business not big enough”
• Who are your customers?
• BENEFIT - Reclaim VAT you pay as a business
When do I have to register?
• Vat Taxable Turnover more than £77,000 for
the previous 12 months (Rolling 12mths)
• Think turnover will go over threshold in the
next 30 days alone
• Take over a VAT registered business on a going
concern basis
Pre-Registration Costs
• Items bought in the 4yrs before registration, if
still held at registration (stock, office equip)
• Services in the 6mths before registration,
providing they do not relate to goods sold
prior
• Must have a valid VAT invoice
VAT Overseas / Recharged
Assuming all
overseas
sales are
exempt from
VAT
Claiming
back
overseas
VAT on UK
returns
Not adding
VAT to
expenses
you
recharge
Do I charge VAT when selling
overseas?
• Goods - No VAT on exports outside the EC, but
keep proof of the export.
• Goods exported within EC
• No VAT if you show customers VAT number on invoice
& proof of export kept
• Otherwise charge VAT & check if foreign VAT
registration required abroad
Do I charge VAT when selling
overseas?
• VAT on Services is very complicated
• The “Place of Supply”
• VAT is charged/not charged depending on:• Where you are based
• Where customer is based
• Type of service
• Is service used for business purposes
Claiming overseas VAT on UK VAT
Returns
• NOT ALLOWED, common error especially relating
to Ireland
• Can only reclaim by submitting request to local
making a direct claim to other country’s local tax
authority
• If significant you can use Overseas VAT Refund
Agents
VAT On Recharged Expenditure
• Recharges - Any cost your business incurs
itself in the course of supplying goods or
services to customers i.e. Travel, Hotel,
Postage
• These are not disbursements, therefore...
• VAT CHARGED ON EVERYTHING
VAT On Motor Costs
What is a
“Fuel Scale
Charge”
Can you
reclaim VAT
on mileage
claims
Can VAT be
reclaimed
on car
expenses
Fuel Scale Charges
• Your business reclaims ALL input VAT on fuel
costs
• In return pays the appropriate fuel scale
charge
• Accounts for private fuel costs
• FSC – On vehicles based on CO2 Banding
Mileage Charges
• HMRC Mileage Rates
• 45p per mile first 10,000 miles per year
• 25p per mile after this per mile
• VAT can be reclaimed on the petrol element of mileage claims, as
long as sufficient VAT receipts are kept to make the claim
• 10,000 miles claimed at 45p per mile in a 1400cc petrol car in the
year. HMRC advisory fuel rate is 15p per mile – Input VAT of £250
reclaimed each year (Based on 01/12/12 rates).
CAR EXPENSES VAT
• Nothing to reclaim on purchase unless taxi, driving
instructor or self-drive hire business
• Car lease, 50% of VAT allowable only if any private use
• Reclaim all VAT on repairs and maintenance, if business
pays for expense and some business use
• Generally recover VAT on all other expenses like fleet
management and off-street parking.
Sage Software VAT Issues
“T” Codes
on sage
Reconcile
VAT Returns
SAGE Common Issues
• VAT Return Box 7. Don’t include:• Expenses Like salaries and Taxes
• Anything outside the scope of VAT like Rates, MOT, Vehicle
Licenses
• “T0” Zero Rated, “T1” Standard Rated, “T9” Exempt
from VAT
• Once VAT Returns are agreed on Sage Software ensure
transactions are reconciled for VAT purposes.
In Conclusion …
TOP 10 VAT TIPS
1.
Would Voluntarily VAT registration benefit you...
2.
Ensure you register at the right time
3.
Don’t miss pre-registration VAT you can claim
4.
Not all sales overseas are VAT exempt
5.
Watch your treatment of overseas VAT
6.
Watch how recharges are treated on invoices
7.
Is “fuel scale charges” working for you
8.
Is input VAT on mileage expenses being reclaimed
9.
Are motor expenses on VAT returns being treated correctly
10. Are my SAGE VAT returns being calculated accurately
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