VAT NOTES

Useful information on VAT can be found at: http://www.hmrc.gov.uk/vat/

Remember the VAT rate since 4th January 2011 has been 20%.


Registration Limits
From 1st April 2016 registration limits were increased to £83,000 and de-registration limits to £81,000.


VAT on CAR or VAN fuel
Do not forget if you claim VAT back on fuel where the vehicle is used for both business and private purposes then Fuel Scale Charges must be used. This is a useful link: www.gov.uk/reclaim-vat/cars

What you can and can’t reclaim VAT on
This is a useful link:
www.gov.uk/reclaim-vat


VAT Recovery
We have been advised that NO VAT can be claimed against purchases if there are no supporting documents to prove it was deducted. Secondly any errors or omissions on a VAT Return have now to be reported to Customs & Excise. This means that it is now more important than ever that all paper work relating to your business must be kept safely, and if documents are missing duplicates must be obtained.


IF YOU ARE VAT REGISTERED IT IS VERY IMPORTANT THAT YOUR INVOICING COMPLIES WITH THAT SET OUT BELOW

Revised VAT invoicing
Taken from CCH TAXES The Weekly Tax News Issue 463 20 August 2007
Invoices issued to customers are a vital checking tool for HMRC. The tale is told of the VAT officer who visited a family trading company and noticed that all of the VAT invoices for the company’s alleged expenditure were folded, faded and generally weather beaten, except for one. That exceptional A4 invoice was unfolded, almost snow white and generally pristine. The officer’s inquiries revealed that the invoice was from a genuine, VAT-registered builder. However, some of the details on the ‘customer-copy’ of the invoice failed to match the sales records produced by the builder. The ‘customer-copy’ of the invoice was for a significantly larger amount and the work done by the builder had been performed in the garden of the home of the company’s controlling director, rather than at the business premises. Usually, only an alert and conscientious officer spots such a false invoice out of hundreds. Officers and advisers struggle to cope with a relentless stream of VAT developments: court judgments, tribunal decisions, Acts of Parliament, statutory instruments, European directives, HMRC press releases and revised official publications and forms. Many developments are not of general interest. However, one forthcoming development will affect many VAT-registered persons: the revised requirements for a valid VAT invoice.


Requirements of a VAT invoice
In certain circumstances, a registered person (other than a retailer) must provide a VAT invoice, for example if he makes a taxable supply in the UK to another taxable person. From 1 October 2007, a VAT invoice must show the following particulars if it is issued to another taxable person in the UK:

  • a sequential number based on one or more series which uniquely identifies the document previously, the requirement was for an ‘identifying number’). The invoice number can be numerical, or a combination of numbers and letters, but it must form part of a unique and sequential series. Thus, a supplier can operate more than one sequence at the same time;
  • the time of the supply;
  • the date of the issue of the document;
  • the name, address and VAT registration number of the supplier;
  • the name and address of the person to whom the goods or services are supplied;
  • description sufficient to identify the goods or services supplied;
  • for each description, the quantity of the goods or the extent of the services, and the rate of VAT and the amount payable, excluding VAT, expressed in any currency;
  • the gross total amount payable, excluding VAT, expressed in any currency;
  • the rate of any cash discount offered;
  • the total amount of VAT chargeable, expressed in sterling;
  • the unit price;
  • (a new requirement) where a margin scheme applies under VATA 1994, s. 50A (second-hand goods, antiques, works of art, collectors’ items) or 53 (tour operators), a ‘relevant reference’ to the appropriate provision in Directive 2006/112 (the new VAT directive) or any indication that a margin scheme applies. For example the invoice may include the legend ‘This invoice is for a second-hand margin scheme supply’ or ‘This is a tour operators’ margin scheme supply’; and
  • (a new requirement) where a VAT invoice relates in whole or part to a supply where the person supplied is liable to pay the tax, a ‘relevant reference’ to the appropriate provision in Directive 2006/112 or any indication that the supply is one where the customer is liable to pay the tax. For example the invoice may include the legend ‘This supply is subject to the reverse charge’. This requirement is important where (1) the gold scheme applies or (2) the reverse charge applies to try to counter missing trader intra-Community fraud, for example concerning certain ‘business to business’ supplies of mobile phones.


A requirement to issue invoices for exempt supplies only arises when the supply is ‘business to business’, across an EC border and an invoice is required by the member state of receipt. For intra-EC zero-rated supplies of goods (dispatches), the invoice must show one of three references :

  • reference to the relevant article in Directive 2006/112;
  • a reference to the relevant UK provision; or
  • other indication that the supply is a zero rated intra-EC supply (for example, the invoice may include the legend ‘Intra-Community supply subject to VAT in the country of acquisition’).
See also: www.gov.uk/vat-record-keeping

Company Stationery
Could we bring to your attention, in case you are unaware of the rules, the information that must be shown on all Company stationery. This is a legal requirement and the details can be found at :-
www.gov.uk/running-a-limited-company/signs-stationery-and-promotional-material


Retention of VAT invoices
See: Keeping VAT records HMRC Reference:Notice 700/21
A taxable person must keep all business records, such as VAT invoices that support claims for input tax, for at least six years unless HMRC have agreed (preferably in writing) a shorter period (VATA 1994, Sch. 11, para. 6(3)).
However, arguably some records should be kept for longer than six years because some provisions have a longer impact than six years. For example, if VAT is recovered on the cost of a project which is expected to take several years to produce any income (supplies) and such income is likely to be taxable, then the VAT is recoverable when incurred. If, within six years of that recovery, the actual income is exempt or only partly taxable, then all or a part of the input tax is clawed back by HMRC. Occasionally a project, such as a property transaction, takes so long to complete that more than six years elapse before any income arises.
Also, the capital goods scheme (CGS) requires the repayment to HMRC of VAT recovered or enables the recovery of VAT previously disallowed if there is a change in the taxable use of a building costing over £250,000 during the ten years following the date when the expenditure was incurred. Thus, records must be kept of the use of such a building over more than six years. An extra ten-year period starts for the CGS if further expenditure of more than £250,000 is spent on the building, for example constructing an extension.
Electing to tax is another instance where records should be kept for more than six years, because an election lasts for at least 20 years. For example, a building may be acquired for use by a taxable business, but there is some spare space which is let out and an election made so the rent received is standard-rated and the VAT on the cost of the building is all recovered. Perhaps after four years the tenant leaves and no more tenants occupy the building because all the building is used to make taxable supplies. If the building is sold, say, 12 years after the tenant left, unless appropriate records are kept for much longer than six years it may not be recognized that the election applies to the sale of the building (although HMRC now register all elections and HMRC could be asked if an election applies).