Bookkeepers’ Club Tuesday 4 th 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 Pre- registration 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 CO 2 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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