Hi, could some clarify for me what I should be doing with the following:
Client purchases stock from a VAT registered company. At the time of purchase they were running a VAT free promotion.
The Net goods came to £190.30 VAT should have been £24.82 Received a discount for £24.82 Payable was therefore the net amount £190.30
When completing my client's VAT return, am I right in reclaiming Vat on £190.30 (treating this as the gross figure), so books would show net £165.48, VAT 24.82, Gross £190.30, rather than claiming nil for VAT.
Very strange situation where goods are being offered to trade customers with the seller picking up the VAT on the trade.
I suspect that this was not in fact a VAT free sale but rather a discount equivalent to the amount of VAT payable.... Quite different things.
If this was in fact a discount equivalent to the full amount of the VAT payable then it's actually a case that the amount paid still includes VAT.
Lets work back through them as though the whole lots was at 15% which you seem to be implying.
A net figure of £190.30 would result in VAT of £28.55 so total of £218.85.
If a discount of £28.55 was given which is the equivalent of the VAT then the reality is that the £190.30 is actually made up of £165.48 for the goods and £24.82 VAT. The discount of £28.55 which professed to be VAT was actually £24.83 for the goods and £3.72 VAT.
So I think that the way that you are doing it is correct.
talk later,
Shaun.
Oops, just reread the original posting which makes it clear that we're talking about 15% VAT rate. Edited the 17.5% option out. Sorry.
-- Edited by Shamus on Thursday 4th of February 2010 02:35:49 PM
-- Edited by Shamus on Thursday 4th of February 2010 02:37:04 PM
__________________
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.
Thanks for the replies. Glad I am on the right tracks. I think it is just a discount which happens to be equivalent to the VAT amount so think I am correct. Its just the way the invoice showed the figures threw me.
Other things that really grind my gears (to quote Peter Griffin) are the empty promises to newbies from training companies, directors treating their companies as their own private piggy banks and unqualified accountants being able to practice when qualified accountants are not allowed to.... Grrrr.
Hope you have a good evening Peasie,
Shaun.
__________________
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.
