VAT Secret: No VAT Invoice Required

Issue 8: Full VAT Invoice Not Required

This one is easy so I will get straight to it.

As a supplier if you are issuing an invoice with a total value of no more than £250 then a full VAT invoice is not required. 

More specifically, you do not have to itemize the VAT value. The invoice could simply read “Total £250 including 20% VAT”

This is quite acceptable to HMRC. Alternatively you could just treat it as a full VAT invoice whichever is easier for you. I told you this was easy.

Law: VAT Regulations 1995 (SI 1995/2518), reg. 16(1)

Marlon Appleton

Tax Partner 

Harvey Edwards LLP

marlon.appleton@he-llp.com

VAT Secret: Suppliers That...

Issue 7: Am I My Supplier’s Keeper?

Ermm..Yes you are.

I have heard this one so many times it’s no longer funny. It’s almost 11pm but I am compelled to write this before I go to bed.

Have you ever been told that the VAT responsibility rests solely with the supplier to the point that if the supplier charges you VAT incorrectly it's ok for you to recover it from HMRC as long as the supplier pays over the same incorrect amount as output tax?

I’m sure you know what I have to say about that. I will be diplomatic and simply say that this assertion is incorrect.

As a customer it is equally your responsibility to ensure that you do not recover VAT that has been incorrectly charged to you, so keep your eyes on those invoices from your suppliers. 

For case law and additional insights contact:
Marlon Appleton 
marlon.appleton@he-llp.com

VAT Secret: Hotel Room Booking

Issue 6: Booked a Hotel Room Lately?

I am happy to say that I have never booked a room and not show up, but let’s assume that you have; Following recent case law, if you make a deposit when you make the booking for an unspecified room then no VAT is chargeable if you decide not to turn up and the hotel charges you a “no-show” fee. So check your bills people.

Similarly, the booking fee/down payment itself is not Vatable until you are given a room.

Don’t you just love VAT? It’s oh so exciting!!! (No sarcasm on my part).

For further insights contact Marlon Appleton.

marlon.appleton@he-llp.com

The Secret is Out: Issue 5

Issue 5: Do You Live Where You Work

I meant that literally, not in the sarcastic manner that your wives or husbands would often complain about.

If your utility bill is in the name of your company the electricity company may more than likely have your account listed as a business, which may not necessarily be incorrect. However if you also live at that premises you should submit a VAT Declaration to your utility company to reduce your VAT costs.  As the Meercats would say….Simples. 

For additional insights please contact Marlon Appleton.

marlon.appleton@he-llp.com

The Secret is Out: Utility Bills

Issue 4: Check Those Utility Bills

Many are not aware of this tax. Then again why should you since it’s only supposed to be charged to businesses that consume above a certain level. 

Climate Change Levy or CCL is a tax on the electricity and gas that you consume. The cheeky thing about CCL is that VAT is charged on it as well. Yep, that’s right you pay tax on the tax. I have no idea how the government got away with that one.

Businesses
I suggest that you check your utility bills to ensure that you are charged correctly. If your average daily electricity consumption is 33kwh or less then no CCL should be charged on your business bill.  Likewise, if the daily average gas consumption is 145kwh or less no CCL should be charged.

Private Residence

For households, no matter what your consumption level, CCL should never ever be charged on your bill. 

I have seen where businesses and residences are charged incorrectly so check your bills. You can go back years to demand a refund 

For more insight on the above contact Marlon Appleton.
marlon.appleton@he-llp.com

The Secret Is Out-Indirect Tax Savings: Issue 3

TGIT....Thank God It's Tuesday and yes it's that time of the week when we issue the next indirect tax secret. (I'm not certain TGIT will catch on, but what the hell, at least I should get points for originality). 

Issue 3: Prompt Payment Discounts

I can’t tell you how many times I have seen this error made by suppliers and totally missed by their customers. It’s even worse for customers who are not VAT registered. This error is made by large and small businesses alike.

When you raise an invoice offering a discount for prompt settlement the VAT should be calculated on the discounted value regardless of whether the early payment option has been taken up by the customer or not. 

This however does not apply if your terms allow customers to pay by instalments. Phew! I hope it sinks it now. 

For HELLP with the above contact Marlon Appleton

marlon.appleton@he-llp.com

The Secret is Out: Indirect Tax & VAT Savings Revealed

Since we have published "Issue 1" we have received higher than expected interests and this only means more pressure to keep these flowing but only if you promise to keep your likes  and comments coming. With that said "Issue 2" is below for your reading pleasure. 

Issue 2: Are you an Agent?

No not double agent, I am referring to those hard working individuals who sell goods or services on behalf of a principal for a commission. 

My firm recently got a client that got frustrated with his previous accountant because they submitted his returns to HMRC late… twice. After receiving all his documents and reviewing his VAT returns we realised that he had been paying way too much VAT to HMRC. No he is not the generous type, he just wasn't clear on the VAT rules.

This is what happened: My client (who will be referred to as 007) acts as an agent for Company A. 007 finds a customer ”X” who is willing to buy the products of Company A. Unfortunately “X” is currently tied into a contract for a similar but older equipment with Company B. In order to get the sale, Company A agrees to pay the early termination fees that “X” will have to pay to Company B.  

Now in order to get things going 007 raises an invoice to Company A for his commission and the contribution towards the early termination fees.  The mistake 007 made was charging VAT on the whole lot (maybe he should stick to acting). In this instance VAT should only be charged on the commission.  

For HELLP with the above contact Marlon Appleton

marlon.appleton@he-llp.com