I have a VAT registered client, who is a bit slack with his paper work (understatement!)
Quite often I come across payments for purchases/ expenses that do not have a VAT invoice. Either it is missing completely, or isn't a VAT invoice (particularly if it is an internet purchase)
My query is how to process them both in the accounts and on the VAT return.
I am not making any claim for the VAT on any non compliant purchase invoices, so should I enter the gross amount as the cost, or split out the net cost before VAT and create a separate expense account for non claimed VAT (coded outside the scope)?
With regard to the VAT return, should I include the purchases on the return
Looking forward to seeing what you guys have to say
I agree with you about not making a claim for vat with a non compliant invoice.
If you are sure you won't be getting a vat invoice then I would enter the gross amount as the cost only and not split it and also enter it so it appears in box 7 on the vat return.
Also point out to you client that their vat liability is going to be higher and could easily be reduced with the correct paperwork.
Any invoices that I have a query over I out as T0, so do not claim any VAT but include it on the VAT return. Its OK to not claim VAT, as you never know if on a VAT inspection, they may pick it up and pay up!! ( I know I know, not likely but possible)
However, if you claim it and cannto justify it, then thats a black mark against you.
Can I add another question to this (it's a bit like 'you are the ref, what would you do?' - apologies to none football fans):
You buy some diesel from, say, Tesco and forget to ask for a VAT receipt (ie. you only have the standard receipt). Now, everyone knows Tesco is VAT registered, so in theory all you have to do is ask them for their VAT number and write it on the receipt (the same as many small corner shops do).
The question is would you do that and claim the VAT, or, because the receipt is non-compliant, ignore the VAT?
I personally wouldn't claim it. Usually they make the point by emblazoning the receipt with words such as "This Is Not A VAT Receipt" just to emphasise the point.
Your comment 'no claimy VAT' reminds me of that bloke on a TV gameshow, bit vague as I cannot remember the name but it was when a guy had to stand in front of loads of girls to get a date!!
