I know that there is no VAT involved with insurance premiums but should the amount of any insurance premiums still be included in box 7 on the VAT return?
Is there any difference in the treatment between insurance for a company van and, say, professional indemnity/public liability insurance?
I am finalising the VAT return for my first client and need to get it posted out with payment today.
I always include it as the box states "All other inputs" not just those with associated VAT. This box was never going to be relatable back to the VAT figure anyway when one includes non standard rated items. I just think that they look for it being sufficient to support the VAT reclaimed figure.
When they came to visit me (I hadn't done anything wrong, it was just the standard visit after 18 months to ensure that your being a good little bunny) all that they asked me was to justify the figures included (taking them back to invoices and bank) and seemed quite happy with my approach.
Insurance on a company van is to all intent and purpose the same as any other company insurance.
How do you treat insurance? I actually follow the accruals concept and do mine by allocating it against the periods to which it relates and claim the associated VAT in those quarters but I know of others who allocate all of the VAT in the quarter that the Insurance is purchased. Pretty sure that those nice people at the VAT are happy with either method but wouldn't mind knowing how others treat it.
Hope that this helps or at least sparks a better response from someone else.
cheers,
Shaun.
-- Edited by Shamus on Friday 22nd of January 2010 10:03:56 AM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The rule of thumb that I go by is as below. All are included on VAT return, except T9 which are transactions outside the scope of VAT.
T0 (T zero) for zero rated transactions - T1 Standard rated transactions (currently 17.5%) T2 Exempt transactions - Insurance, Postage T3 not in regular use T4 for standard rated sales to EU customers T5 lower rate of VAT (currently 5%) T6 not in regular use T7 purchase of zero rated goods from EU suppliers T8 purchase of standard rated goods from EU suppliers T9 outside the scope of VAT - PAYE payments, Corporation Tax payments, VAT payments, Wages/Salaries, Loan/HP repayments, Payments to directors and or shareholders T10-T99 not in regular use
I hope this helps :)
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http://www.sosaccounts.co.uk
I always use T2, same as stamps etc as these are still expenses and I like them to appear on the VAT return so I can reconcile the tax control accounts with purchases and sales..
I thought Postage was Zero rated and Insurance Exempt? Would water bill and council tax(For Business) be zero or exempt?Both are on the VAT return aren't they but I would have applied T0 zero rated? What is a clear definition of the difference between exempt and outside of the scope of VAT? Thank you Tonys
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks again Shaun, Couple of points I wondered if anyone could clarify; Water supply is stated to be standard rated for business-I have never seen VAT on a Business Water bill? If most normal building work is standard rate how does the reduced rate of 5% apply for renovation or altering to empty residential property? For example, I rent out a flat which I may have building work done on it whilst empty but I still pay standard VAT rate to builder. A friend of mine has just built a new house(I should say his company has) on which I assume he pays no VAT on the sale, can he claim all the VAT on the materials he uses for the construction of it , as he is a VAT reg business?
An individual can claim back the VAT on a new build, a coversion or the renovation on property that has been empty for more than ten years. You can't claim the VAT back (unless you are VAT registered) for modifying or improving an existing dwelling.
All invoices must be proper VAT invoices made out to the individual developing the property. You then complete a form, listing all the invoices (they have to be in the same order as the invoices). You can only claim once so it's usual to wait until the devlopment is completed and has a certificate of completion. You can claim before but you would not be able to claim subsequent invoices.
The builders and tradesmen involved can supply invoices with no VAT directly to their customer (including their labour and materials they supply)
From my experience local builders and tradesmen do not understand the process and getting them to supply correct invoices can be a nightmare. If a client pays for materials and the builder collects them, the invoices are often in the name of the builder and they have to be cancelled and reinvoiced correctly (altered or photocopied invoices aren't acceptable)
Thank you. With regards to Council Tax and Water bills for a business I am still a bit confused after reading HMRC guide. There is no VAT on either so are they exempt or zero rated? Sorry to be a dunce but I hate not fully understanding something so basic! Can anyone spare time to comment? Tony
I am not experienced with VAT but reading the VAT guide VAT Notice 701/16 It appears that water supplied to an industrial business that uses water as part of its process is VATable. Non industrial businesses is zero rated
2.3 What are industrial activities?
An industrial activity is any activity described in any of Divisions 1 to 5 of the 1980 edition of the Standard Industrial Classification. In brief, those Divisions are
1. Energy and water supply industries 2. Extraction of minerals and ores other than fuels; manufacture of metal, mineral products and chemicals 3. Metal goods, engineering and vehicle industries 4. Other manufacturing industries 5. Construction
I believe that Business Rates & Council Tax are a form of taxation and fall outside the scope of VAT
Bill
As a footnote, VAT is not so basic and I for one do not find it an easy subject - It's OK on the run of the mill stuff, it's when you delve outside the norm it gets complicated
-- Edited by Wella on Wednesday 3rd of March 2010 12:03:02 PM
got a bit more time as did my depreciation revision in answer to another question!
Your not a dunce, it's a sound question.
Water supply to households are zero rated
Water supply to businesses are standard rated
Surely VAT on council tax would be tax on tax? I'm seeing that one as exempt but happy to be told that I'm wrong.
cheers,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thats confirmed things in my mind but the standard rate on water supply to business I find stange as I have never seen VAT on my business water bill nor have I ever reclaimed any. Thanks to Shaun and Bill
from the HMRC website in relation to water rates (I don't always look at it this size by the way!) :
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think the deciding factor is the word Industrial. In my last I gave examples of what HMRC class as industrial. I lifted it of their site, with the VAT section. It didn't copy and paste too well so I retyped verbatum.
I think if, if for example you are a retail shop or an office and your water use is for the supply of drinking water, normal hygiene etc. then it is zero rated
(Where's Sheila when you need her?)
Follow this long winded link and look at para 2.3 and 2.4
I think the retail shop issue explains it as I ran a Dry Cleaners for 26 years! Really enjoying the Forum. Interview on Fri for accounts assistant fingers crossed. Regards Tony
You're certainly asking all of the right questions on here.
A favorite technical question at interview is how would you calculate the VAT inherent in a figure.
The answer at 17.5% is times 7 divide by 47
At 15% it's times 3 divide by 23
helps if you know something about the history of the company before you go there.
Prepare stock answers for the "Where do you see yourself 5/10 years from now" and "Give examples of when you have been responsible for the work of junior workers / getting a slipping project in on time". and of course the the old favorite "How would you handle a difficult client"... Pulling them across the desk and beating them repeatedly is not the stock answer to that one!
Oh yes, and never refer to money as a motivating factor.
Good luck from me too matey. We'll all be routing for you.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I know this is an old thread - but I have just been trying to clarify something.
According to the forum T2 on sage is Exempt from VAT but included in the VAT return on Sage
HMRC website says
Exempt goods and services There are some goods and services that are exempt from VAT. Exempt goods and services are not taxable for VAT, so if you supply them, then:
you don't charge any VAT on them you don't include them in your VAT accounts you can't normally claim back the VAT on related purchases
I would have thought if supply is not included then purchases would not be - So now I am confused is Exempt from VAT included in box 7 on the VAT return or not.
Thanks
-- Edited by luthier on Wednesday 29th of June 2011 12:24:45 PM
