VAT flat rate scheme and bad debts

If you use the flat rate cash-based turnover scheme you may still be due a VAT reclaim even though you will not have paid a VAT contribution to HMRC. Section 14 of the VAT Notice 733 spells it out: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000345&propertyType=document#P633_59475 The following is extracted from HMRCs notice: If you use the cash turnover method of…

VAT scale charge where fuel is used for private motoring

Most limited companies do not provide fuel for private use, as the tax charge is normally greater than the cost of the fuel. So the following applies more often to partnerships and sole traders, where there is an apportionment between business and private use. VAT fuel scale charges, for taxing private use of road fuel,…

VAT flat rate scheme

The VAT Flat Rate scheme provides smaller businesses with a number of options that can often create real cash savings. Benefits include: Simplified administration, quicker to produce returns. Depending on the market sector your business operates within, you may be able to reduce your overall VAT payments. To qualify, your annual turnover must not exceed…

VAT flat rate and cash schemes

Two of the VAT special schemes can provide particular advantages for smaller businesses. The Flat Rate Scheme (reviewed in our June 2012 newsletter) can reduce overall VAT payable, especially for traders that are subject to the lower Flat Rate percentages. Cash Accounting allows you to defer payment of VAT added to your sales until the…

Charities and VAT

Charities only need to account for VAT on those parts of its activities that are within the scope of VAT. A quick checklist follows: * Sale of donated goods from a charity shop – zero rated supply * Investment income, bank interest etc – outside the scope of VAT * Donations from general public –…

VAT on salary sacrifice schemes

Due to a recent European Court of Justice ruling, HMRC now consider that the provision of a benefit via salary sacrifice to employees constitutes a supply of services for consideration and is therefore subject to VAT. Benefits that will be affected include: * Cycle to work schemes. * Face value vouchers. * Childcare vouchers. *…

VAT clampdown

HMRC believe that there are a number of businesses that should be registered for VAT, and so far, they have not registered. They are in the process of sending out 40,000 letters to traders who they believe may be in this category. HMRC are offering businesses that “come clean” and notify HMRC of an intention…

HMRC announce VAT disclosure opportunity

H M Revenue & Customs (HMRC) is launching a new disclosure opportunity, this time aimed specifically at businesses evading VAT. The initiative is aimed at businesses not registered for VAT but who are in fact been trading above the turnover threshold, currently £73,000 in a 12 month period. In a similar vain to previous facilities,…

VAT on hot food

At present the more you prepare food for consumption, the more likely the supply will be considered a standard rated supply for VAT purposes. HMRC turned their nose up when an EU case recently came to a different conclusion. A German trader succeeded in having the supply of a hot sausage treated as a supply…