in a vat return which expenses will you include in the total net expense figure box, just the ones where you have actually paid vat on? so not salaries etc. ? what about excempt purchases like stamps etc, will they be included?
ok, last one proffessional fees, no vat charged. so if someone was paid to do a website for example, invoiced us, but no vat was charged, will this be included in the total purchases?
Assuming that VAT wasn't charged because the website designer is not VAT registered, then the professional fee can be excluded from box 7.
If goods/services aren't provided by a taxable person (i.e. an individual or entity that is VAT registered or required to be so), then the transaction is outside the scope of VAT.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
If goods/services aren't provided by a taxable person (i.e. an individual or entity that is VAT registered or required to be so), then the transaction is outside the scope of VAT.
Hi Robert
You have just hit on an area that has caused me so much confusion since I started bookkeeping. I am hoping you will be able to close the book on it for me.
Most things HMRC I can get my head around but this has bugged me from day one.
Just recently there have been a couple of forum members, who have said the same as yourself. That if the supply is made by an entity that is not, and is not required to be VAT registered, it is outside the scope. I fell into this category myself.
To cut a long story short I contacted HMRC some time ago, and asked them to clarify, and was informed that the transaction was outside the scope. Then after a reasoned debate on this forum, which contradicted what I thought, I contacted them again. This time I was told it was inside the scope but with no VAT. From that point on I have been slightly at a loss, as to the correct treatment.
Although VAT700 mentions the status, it (to me) is not crystal clear what is reported on the return, is it the status of the supplier that determines if the goods/ services are in or outside the scope, and therefore included/ omitted form the return, or the type of goods or services being supplied?
Can you (for the sake of my sanity) point me to any authoritative source information that will give me the definitive answer.
Further to the above, VAT Notice 700 section 3.2 confirms that a supply is outside the scope of VAT if it is made by someone who is not a taxable person.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
ok, now i am confused, so if he (website designer in this example) provides supply or services, in the UK, made by a taxable person (i'd imagine he is a taxable person), then he is within the scope and therefor included in the total purchases?
ok, now i am confused, so if he (website designer in this example) provides supply or services, in the UK, made by a taxable person (i'd imagine he is a taxable person), then he is within the scope and therefor included in the total purchases?
The reference to the supplier being a 'taxable person' is only as far as VAT is concerned. It's VAT-speak for someone who is registered for VAT. The assumption with your website designer was that they weren't VAT registered and so weren't (for VAT purposes) a taxable person, hence their supply was outside the scope of VAT.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
Thanks very much for that. I think I will now put this to bed (in my head), and continue with the way I originally thought it should be, and the way, you, and a few others have stated.
Stella1310, sorry didn't mean to get you confused with the terminology. Hopefully Robert's explaination has cleared up the meaning.
I'm more confused about this than ever, my old course notes expressly said to include supplies from none vat registered businesses in box 7. In no way am I suggesting Robert in wrong but I wish the ICB would clear this up once and for all for it's members, at least then I could follow their advice.
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
I don't think that 'a taxable person' does actually mean a VAT Registered person, even if the VAT office think so. Perhaps the confusion is because the UK has such a high Registration threshold.
proffessional fees, no vat charged. so if someone was paid to do a website for example, invoiced us, but no vat was charged, will this be included in the total purchases?
