This will be my first post here, thank you all for having me!
Anyways, the reason for my post here is because I'm quite surprised at a VAT invoice I just processed from a coffee shop franchise.
Now, let's take the example of the top invoice of 6.72 GBP. Now what they seem to do, is exclude the service charge, and the 5.97 is the gross and already includes vat. To obtain the NET amount we simply divide 5.97 by 1.2. The VAT is then *0.2 = 0.99.
The confusing part is that they indicate at the bottom of their invoice the Net as 5.97, which is incorrect! When I called them up to warn them about that mistake they seemed quite confused and didn't really seem to accept the mistake.
I'm quite surprised a franchise like theirs is able to issue incorrect invoices without having any problems? What do they risk by having these wrong invoices?
Cheers,
-- Edited by Shamus on Monday 29th of February 2016 05:20:03 PM
Sorry, you can't use the names of firms or clients or use anything that could identify either.
I'm afraid that I've had to amend your post to reference to the third party concerned.
Shaun.
p.s. welcome to the forum.
-- Edited by Shamus on Monday 29th of February 2016 05:20:17 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
appologies that I needed to remove detail of who you were referring to.
Yes, from the look of that there is no discretion over the 12.5% so the service charge is an extension of cost and hence VATable.
You may find this useful for reference if you debate this with the franchisee again (its quite a high level reference but does mention tips / service charges / Troncs).
As a seperate issue are you 100% sure that the coffee was reclaimable by your client at all? (i.e. purchased outside normal business routine by a non road based employee)
kindest regards,
Shaun.
-- Edited by Shamus on Monday 29th of February 2016 05:25:43 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Ahhh - but is it incorrect? Is the service charge compulsory? In a lot of cases it will say on the bill that it isnt and gives you the option of crossing it off. Or there may be a sign in the shop somewhere (possibly really small print), most often on a menu.
appologies that I needed to remove detail of who you were referring to.
Yes, from the look of that there is no discretion over the 12.5% so the service charge is an extension of cost and hence VATable. oooo did I miss a piccie of the bill before I responded?
You may find this useful for reference if you debate this with the franchisee again (its quite a high level reference but does mention tips / service charges / Troncs).
As a seperate issue are you 100% sure that the coffee was reclaimable by your client at all? (i.e. purchased outside normal business routine by a non road based employee)
kindest regards,
Shaun.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
yep, ninja moderator was in there like a ferret down a rabbit hole.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Oh you couldve scrubbed the name off the top of the bill to give me half a chance!!
Or, I could have scrubbed the whole thing and put it on my to do list unhindered by any thought of urgency.... Oh wait, thats exactly what I did
Lol Jo, imagine what we would be like if anyone paid us for this!
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Oh you couldve scrubbed the name off the top of the bill to give me half a chance!!
Or, I could have scrubbed the whole thing and put it on my to do list unhindered by any thought of urgency.... Oh wait, thats exactly what I did Very unfair to nice people like me!
Lol Jo, imagine what we would be like if anyone paid us for this! You would be pretty well orf!!!!!!!!!!
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Anyhow, you may find the invoice without any trace of the issuer attached to this post. Now, I understand that tips are outside the scope of VAT, I'm simply surprised at the incorrect invoice that specifies a "net" of 5.97 - while the net is actually 5.97/1.2 = 4.975 - that number not being specified anywhere on the invoice.
Now concerning the question if the VAT may be reclaimed on this invoice, the coffees were bought during a client meeting so it shouldn't be a problem.
Actually... And remember not to shoot the messenger here.... Client entertaining is not a tax deductible expense.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I think that we have two different conversations going on in this thread. The first (where I had to remove the name of the business concerned) relates to troncs / service charges / tips and was more of a general discussion related to the VAT treatment.
The other conversation (which the original question relied upon) related to whether the coffee was claimable at all (doubtful).
I certainly think that the thread was a discussion worth having as its one of those areas where regularly emphasising on here that entertaining is seldom allowable prepares the readers to pick it up with clients early on what is a common error amongst small business owners.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
The rules for when such are allowable relate to the expenditure being for foreign clients or there is a situation where travelling on business where one's own drink may be allowable but one's clients is not.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hi Shaun, that's what I was suggesting. One drink, when your off the beaten track, so to speak is totally different to three drinks, which looks like a round / meeting
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
Without knowing if the service charge was optional, we can't say whether the receipt is incorrect or not, although I think it's worded incorrectly because the 5.97 is gross not nett.
To be fair to Alex, this could be 3 employees on a training course for all we know, although as Shaun points out, it's good to be reminded of the VAT rules on entertaining.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
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