Businesses that claim VAT but do not charge VAT - The Book-keepers Forum (UK)

123_Lesley · Veteran Member

Businesses that claim VAT but do not charge VAT

Robert Pearce · Senior Member

There could be several reasons why the company doesn't need to charge UK VAT on its sales. For example:

(1) all of the company's sales may be zero-rated; or

(2) all of the company's sales are outside the scope of UK VAT (such as if they supplied services to overseas businesses). If this is the case, the HM Revenue & Customs guidance states that, as long as the sales would be taxable supplies if they were supplied in the UK, the business is still able to claim input VAT.

You need to go back to the company and find out more about the nature of their sales to determine why VAT isn't being charged on them.

Bucks Bodger · Senior Member

I do a VAT return for a company for which the income is exempt from VAT,
but they can reclaim the VAT they have paid on their purchases.

They receive a refund from HMRC every quarter, with no problems.

Just depends on the type of business.

Hope this helps.

Eunice

RobRJBS · Senior Member

I deal with a few farmers and all of their sales and zero rated so they have no output VAT to pay but claim all of their inputs so have a refund each time. If you expect regular refunds HMRC will also let you prepare monthly VAT returns so you get the VAT back a bit quicker.

With exempt income you are unable to recover input VAT. I also deal with an optitions. Part of their income (eye tests) are exempt and part (frames) are standard rated. As a result you end up with a partial exemption calculation. This in simple terms is where you are allowed to claim some but not all of your input VAT.

123_Lesley · Veteran Member

Thank you for your feedback.

The nature of the business is charter flights... aviation.

They also invoice clients from outside the UK (Europe).

I believe that they are required to keep an EC sales list per calendar quarter?... and that any invoices provided to
EU countries must also contain the recipient company's VAT number including country code?...
Why is this the case if there's no VAT being charged?

Is there a booklet issued by HMRC or anyone else which details what is and isn't vatable?
I've looked on HMRC's website and it seemed a little vague! Just want to ensure I'm covering all bases.

Their Accountant is installing Sage 50 Accounts 2012 (as they have a couple of other companies) and I'll be inputting data and processing their
accounts once every two weeks... completing their VAT return from that which has gone from being monthly to quarterly.

Is there anything else you think I should know, I'd very much apppreciate any advice. I'm going to meet them on Monday and would
like to be prepared!

Thank you in advance.