VAT SEMINARFOR GORINGE ACCOUNTANTS

.

22 January 2014

AGENDA

• How VAT normally works

• Partial exemption

• Mileage, subsistence and entertainment

• VAT accounting when you trade with

Europe

“NORMAL” VAT ACCOUNTING

• Box 6 - supplies made by you

• Box 7 - supplies made to you

• Box 1 - VAT on your supplies “Output tax”

• Box 4 - VAT on supplies to you “Input tax”

• Box 5 – Amount due to/from HMRC

SUPPLIES

• Your supplies include sales, services,

proceeds of capital assets

• Supplies to you include purchases,

overheads and capital expenditure

• VAT recovery depends on making taxable

supplies

• Taxable includes zero-, reduced- and

standard-rated supplies

ZERO & REDUCED -

EXAMPLES

• Zero: food (not catering), books, new

housing, passenger transport and

children’s clothing

• Reduced: children’s car seats, domestic

fuel and power, some caravans

EXEMPT SUPPLIES

• Exempt input tax irrecoverable unless de

minimis

• Partial exemption

• Exempt supplies include

– Land and buildings (option to tax)

– Finance (intermediary not advisory)

– Bookmakers, undertakers

– Health and most welfare

– Sports facilities by non-profit-distributing bodies

MEMBERS’ GOLF CLUBS

• Subscriptions £400K (exempt)

• Green fees £75K (Bridport)

• Bar sales £200K (taxable)

• Drinks purchased £100K plus VAT

• Course expenses £300K plus VAT

• VAT returns assuming standard method?

GOLF CLUB VAT RETURN

• Before Bridport:– Box 1 £55K

– Box 4 £29K

– Box 5 £26K

• After Bridport– Box 1 £40K

– Box 4 £20K

– Box 5 £20K

• Four years?

• Capital goods scheme

MILEAGE

• How to limit claims to VAT on business mileage?

• Claim all VAT on road fuel and account for VAT on fuel scale charge on each vehicle; or

• Don’t claim any VAT on mileage; or

• Keep detailed record of mileage and business/private split and

• Claim only VAT on business mileage with no fuel scale charge

• Claim VAT on employees’ business mileage: 1/6 x fuel element of amount paid (invoices needed)

SUBSISTENCE – WHAT VAT

CAN YOU CLAIM?

• Claim no VAT on flat rate allowances

• VAT paid on meals for employees

• If only proportion of cost paid, claim 1/6 of amount paid

• VAT on cost of canteen facilities for staff

• VAT on meals taken by owner or director when away from normal place of work on business trip

• VAT on hotels or similar where employees or owner away from normal place of work on business

BUSINESS ENTERTAINMENT

• No claims allowed

• Any free provision of hospitality to a person other than an employee

• Entertainment includes any non-reciprocal provision for no charge of– Food or drink

– Accommodation

– Theatre and concert tickets

– Sporting events and facilities

– Entry to clubs and nightclubs

– Using yachts or aircraft to entertain

STAFF ENTERTAINMENT

• Can claim VAT

• Includes temporary staff, casuals, helpers or stewards at events

• Excludes former employees (including pensioners), job applicants and partners, relatives and friends of employees

• Christmas party for staff only (or staff and directors) – claim all the VAT

• Just directors – claim no VAT

• Staff and their guests for no charge – restrict claim to staff element

OVERSEAS CUSTOMERS

• Can claim VAT

• Must be reasonable in scale and

character

• Output tax charge unless “strict

business purpose”

INTRA-EU TRADE – WHAT MUST YOU

DO?

B2C and non-EU

What do you do ?

What returns must you make ?

What entries are needed ?

(£100)

How often must you

make these returns?

What are the deadlines ?

EU cross-border B2B transactions

BUYING GOODS – WHAT’S NEEDED

What do you do?

• Provide your UK VAT number so VAT not charged

What returns

must you

make?

• VAT return

• Intrastat “arrivals” supplementary declaration

• Electronic

BUYING GOODS – VAT RETURNS

• Box 2 - £20 (“acquisitions”)

• Box 4 - £20 (assumes you can claim all your input tax)

• Box 7 - £100

• Box 9 - £100

What entries are needed?

(£100)

• Monthly or quarterlyHow often must you make these

returns?

• Month + 7 days to submitWhat are the deadlines?

BUYING GOODS – INTRASTAT

ARRIVALSWhat returns must

you make? • EU “imports” > £1,200,000 a year

What entries are needed?

(£100)

• Movements of goods only (but not just purchases)

• Commodity codes

• Monthly

• 21st day of the following calendar month (e.g. return covering import today must be done by 21 February 2014)

What are the

deadlines?

How often must you make these

returns ?

• Used to measure intra-EU trade• Criminal regime

BUYING SERVICES - WHAT’S NEEDED

• Assume within “general B2B rule”

• Provide your UK VAT number so

VAT not chargedWhat do you do?

• VAT return onlyWhat

returns must you make?

GENERAL B2B RULE

• Land-related services , e.g. estate agent re specific

property

• Hiring means of transport

• Admissions to events

• Cross-border services supplied by one

business to another

• No VAT charged by supplier

• Purchaser applies “reverse charge”

• Covers all services except:

BUYING SERVICES – VAT

RETURNS

• Box 6 - £100

• Box 7 - £100

• Box 1 - £20 (=reverse charge)

• Box 4 - £20 (assumes you can claim all your input tax)

• NB – not Box 9

What entries

are needed? (£100)

SELLING GOODS – WHAT’S NEEDED

• UK vendor does not charge VAT provided:

• Customer provides VAT number

with country prefix

• Commercial evidence goods have left UK is obtained

within 3 months of the transaction

• Invoice must state why VAT is not charged

What do

you do?

• VAT return

• EC Sales List

• Intrastat “dispatches”

supplementary declaration

What

returns

must you

make?

SELLING GOODS – VAT RETURNS

• Box 6 - £100

• Box 8 - £100

What

entries

are

needed?

(£100)

SELLING GOODS – EC SALES LISTS

• Penalties for late or non-submission

• Name, VAT number and amount sold to each EU VAT-

registered customer

• Scope for smaller exporters to make less detailed ESL

What entries are needed?

• Monthly if annual sales of goods to

EU businesses > £35k

• Otherwise calendar quarterly

How often must you make these returns?

• Due within 14 days (paper) or 21

days (electronic)

What are the deadlines?

SELLING GOODS – INTRASTAT

DISPATCHES

• Criminal regime

What returns

must you make?

• EU “exports” > £250k in calendar year

• Must be electronic

What entries are needed?

• Movements of goods only (but not just sales)

• Commodity codes

• 21st day of the following calendar month (e.g. return

covering export today must be done by 21 February

2014)

What are the deadlines?

SELLING SERVICES – WHAT’S

NEEDED

What do you do?

• UK supplier does not charge VAT provided satisfied

customer is in business outside UK (VAT number best

evidence)

• Invoice must state why VAT is not

charged

• VAT return

• EC Sales List

What returns

must you make?

SELLING SERVICES – VAT RETURNS

What entries

are needed? (£100)

• Box 6 - £100

• NB – not Box 8

SELLING SERVICES – EC SALES

LISTS

What entries are needed? • Same information as for goods

How often must you

make these returns?

• Calendar quarterly

• If doing monthly returns for goods can do

services monthly too

What are the

deadlines?

• Due within 14 days (paper) or

21 days (electronic)

• Penalties for late or non-

submission

INTRODUCTION TO VAT

These slides are intended for use in connection with the

presentation given on 22 January 2014. No action

should be taken on the basis of information contained in

these slides or in the presentation without obtaining

professional advice specific to the circumstances.

No responsibility for loss occasioned to any person

acting or refraining from action as a result of the material

in these slides or presentation can be accepted by the

speaker or by Terry Dockley & Co Ltd

Copyright 2014, Terry Dockley & Co Ltd