I do the books for a cookery school and we have several people who help with teaching. They then invoice us. They aren't VAT registered but is the transaction included in the return as part of Total Purchases? I don't include staff on payroll.
This very question is debated on another thread, T0 and T1, whether non VAT registered supplies should be included on box 7 of the VAT return.
There is conflicting opinions between forum users and HMRC but i would say you are safe to go with whatever you want as long as your consistent with approach.
My personal opinion is that as they are not VAT registered they are outside the scope of VAT and therefore shouldnt be included but there is also a persuasive argument that the nature of supply determines the VAT treatment. If this would be a standard supply (if they were VAT registered) then should be coded as T1.
At the end of the day wont affect the VAT liabilty just the statistical figure in box 7 so dont see it being a major issue.
I believe from what you are stating they are a subcontractor and therefore a supplier and nothing to do with your payroll, therefore would be T0 treatment to ensure shown on VAT return along with all other suppliers of service.
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Donna Curling - Complete Book-Keeping Ltd (CBKLtd) - 07939 101900
