The VATable Debate Continues - The Book-keepers Forum (UK)

Wella · Expert

The VATable Debate Continues

attilabenko · Guru

Hi Bill,

I do the same, include those in returns. I think this is something those famous bodies (ICB,AAT,etc) should take on and get a clear guidance from HMRC. As we know if any individual phones HMRC the answer will depend on the day of the week and if it is before or after lunch time but if the industry itself asks they should tell what is right.

-- Edited by attilabenko on Monday 14th of March 2011 11:08:35 AM

semsley · Guru

I zero them too so that they appear on the VAT return. The only things I outside scope are things like wages, paye, ni etc., journals etc., donations and grants (only applicable usually in charities).

Susie Sue · Senior Member

Me too.

Wella · Expert

It's good to know I am not alone.

It gets a bit disconcerting, when something like this pops up from a large organisation, and it has certainly made me wonder

Bill

BudgetB · Guru

Yes, same as Semsley.

Lumpy · Veteran Member

Excuse me for being a bit dense here but if there is no acceptable documentation then I don't see how it can be included in the VAT account as zero rated. I was under the impression that, regardless of what rate is used, suitable documentation had to be provided to substantiate VAT records.

The particular problem I have is that my mechanic who services my van in not VAT registered but the monies I pay him should be included in Box 7 on the VAT Return even though there is no VAT element on the payment. I have spoken to HMRC on this point and, surprise, surprise, they passed the buck to my software provider (Moneysoft - Money Manager Business Edition). Moneysoft tell me that the payment should be treated as exempt as this will then show up in Box 7 of the VAT 100 report but with no VAT element. Similarly, I pay rent on a lock-up garage which has no VAT element as the owner is not registered but HMRC have confirmed that rent of land, premises, etc is classed as exempt.

YLB-HO · Guru

Government bodies have different rules for the scope of VAT as a lot of their income is outside the scope of VAT, therefore the related expenditure is also outside the scope of VAT!

I spent a number of years as a military accountant and reclaiming VAT was different/more complicated than the plymouth one shown. The rules for what each govt. organisation is allowed to reclaim is different.

This is why it is different to dealing with VAT with businesses.

For example if a member of the Armed forces paid for a Hotel bill, and then was reimbursed for the expense (which was 99.9% of the time), it was treated outside the scope of VAT. However we paid the Hotel bill by invoice then the VAT was reclaimable. The reason for this was on the rare occasion that the bill could be paid directly from public funds it was considered to be under the rules as being inside the scope of VAT as any potential income (- even more complicated!) was inside the scope of VAT.

Whereas the reason of the expenditure behind why we reimbursed the bill was outside the scope of VAT as the related income was also outside the scope of VAT..

-- Edited by YLB-HO on Monday 14th of March 2011 04:46:00 PM

-- Edited by YLB-HO on Monday 14th of March 2011 04:47:34 PM

-- Edited by YLB-HO on Monday 14th of March 2011 04:58:09 PM

attilabenko · Guru

Hi,

I am dealing with a number of invoices where domestic rent is exempt but commercial rent is being charged with VAT and also insurance payments are being charged with VAT (these are from a brewery to a pub)

Not really related but found it funny (tuition/education providers):

The rules of VAT if you provide private tuition as a sole proprietor or partner (see section 6)

the tuition that you carry out yourself is exempt; and
the tuition that employees or other helpers carry out is standard-rated

That must be a difficult field...

Wella · Expert

YLB-HO wrote:

Government bodies have different rules for the scope of VAT as a lot of their income is outside the scope of VAT!

Cheer Frauke

This would explain the difference

Lumpy.
We have some serious debate on here about the way supply by a non taxable person should be dealt with. I myself have spoken to HMRC a couple of times on the correct treatment. The first person i spoke to told me as the supply was made by someone outside the scope, the supply was also outside the scope. the second time I was told that it was not outside the scope.

By chance, yesterday, when this came up I was looking at what my software suggested (VT transactions+) and their guide says

"Transactions that are exempt, zero rated or from an unregistered supplier, are normally within the scope of VAT, and should be shown on your VAT return"

Bill

YLB-HO · Guru

Attila, you are discovering why some people specialise in VAT and do nothing else!

Also why it can be a good idea to specialise in particular types of businesses as you can see there are sometime silly rules....

Did you know that if a Mare (female horse) from overseas comes to the UK and is "covered" by a UK Stallion (male horse), providing the Mare leaves the UK - the service is not provided in the UK, but the country where the foal is born. Or a least that used to be the rules a few years ago. I've not checked recently if this has changed.

Wella · Expert

Tell that to the stallion smile

attilabenko · Guru

About stallions, anybody any good tips for Cheltenham?