may treat the search fee as a disbursement and also outside the scope of VAT. If youre unhappy with HMRCs service, contact the person or office youve been dealing with and theyll try to put things right. Electronic invoices are acceptable as evidence for input tax deduction, subject to the normal rules, providing the following can be ensured: You may find it helpful to seek advice by calling the VAT general enquiries helpline before you start to use electronic invoicing. This will tell you what records you need to keep in case a Capital Goods Scheme adjustment becomes necessary. When you issue a credit note or receive a debit note, you must adjust: The accounts or supporting documents must make clear the nature of the adjustment and the reason for it. The link to the VAT Supply and Consideration Manual in section 8.1 has been updated. A person who makes taxable supplies below these limits can be registered in the UK on a voluntary basis if they wish, in order, for example, to recover VAT incurred in relation to these taxable supplies. This rule applies only to supplies for which the tax point was determined under the rules described in paragraph 14.2. If payments are due to be made at regular intervals (for example, by bankers order or direct debit), you can issue a VAT invoice at the start of any period of up to one year (provided that more than one payment is due in the period) to cover all the payments due in that period. If you do this, youll be regarded as acting in your own name and treated for VAT purposes in the same way as an agent arranging supplies of goods. If you have charged or claimed an incorrect amount of VAT and have already declared it on your VAT Return, the remainder of this section does not apply. But, sometimes VAT has to be calculated from a price in which it is already included (for example, in the less detailed VAT invoices described in paragraph 16.6.1). If theres a single surviving partner and that partner intends to recruit a replacement partner, they should notify the VAT Registration Service of the details of the new partner within 30 days of the new partners appointment. The basic tax point is overridden by the issue of a VAT invoice as set out in paragraph 14.2.2. In the absence of a credit note, the original invoice, together with other records which show the consideration received, such as a bank statement, provide the evidence necessary to support the VAT adjustment. When you supply goods on sale or return, for example, they have not been sold and you still own them until such time as theyre adopted by your customer. A manufacturer makes a separate charge to a customer for royalty or licence fees, which were incurred in making a supply to the customer. Opting to tax land and buildings (VAT Notice 742A) explains how you can choose to standard rate some supplies of property, which would otherwise be exempt, by opting to tax. Where HMRC can demonstrate that you knew or should have known that your transactions were connected with fraudulent evasion of VAT then you will lose your entitlement to claim the input tax linked to those transactions. If you issue an invoice in your own name for a supply of goods which you arrange for your principal, then for VAT purposes only, you must treat the transaction as though it was both a supply to you and a supply by you. No UK VAT would be chargeable on supplies that take place outside the UK. This paragraph deals with the VAT treatment of MOT test charges. Youll be able to get this information from your online monthly statement, or if you have delayed your customs declaration, you must estimate the amount. If you know that youll be unable to make an accurate return, you should tell HMRC by writing to the VAT Written Enquiries Team as soon as possible. The supplies that you arrange are made by, or to, the principal you represent. For decreases in price this will be the accounting period where the refunded amount is paid to the customer. Non-UK VAT registered traders cannot use postponed VAT accounting (PVA) and have the same options available to report and pay import VAT as they do for customs duties. Ending a Tenancy for Renovations or Repairs. Tax is normally calculated at the appropriate percentage of a price that has first been decided without VAT, and the VAT invoice will show these separate amounts. The information on this subject is in 2 sections. If HMRC issues an assessment which is later found to be too low, HMRC may issue an additional or supplementary assessment, subject to assessment time limits. Such an offer may or may not be taken up, and the goods or services will not be supplied unless payment is received. If no such purchase price can be determined then the value is what it would cost to purchase goods similar to, and of the same age and condition as, the goods in question. You can treat the VAT on services that you received before you were registered as if it were input tax. For example, if you take a deposit as security to ensure the safe return of goods you have hired out, and the deposit is either refunded when the goods are returned safely or forfeited to compensate you for loss or damage, then no tax point is created. If you issue invoices to persons in an EU member state, credit or debit notes which amend those invoices must contain all the information required to be included on an invoice. These arrangements cannot be used for supplies which are for the benefit of travellers, for example, supplies of accommodation or passenger transport. The standard tax period is 3 months. You may recover VAT incurred on staff entertainment to the extent that the expenditure relates to the purpose of your business. If you act as an agent in the sale of phonecards, youre making a standard-rated supply. The client will normally need to use the document for their own purposes, such as to obtain a loan. Most enquiries can be dealt with by calling the VAT general enquiries helpline. HMRC will encourage you to co-operate and produce evidence, and may reduce the penalty to take account of the extent of your co-operation with the investigation. Goods passing between the Channel Islands and the UK or the Isle of Man are imported or exported for VAT purposes. The following table lists some of the decisions you can challenge. The amount of the tax adjustment can be calculated from the total tax-inclusive amount actually charged. You can call the VAT general enquiries helpline if you are not sure if youre entitled to a claim. For example: On the other hand, some people who normally trade as principals, such as solicitors and architects, may occasionally arrange supplies as agents for their clients. You can find out more about this in Relief from VAT on bad debts (VAT Notice 700/18). Some special rules about tax value are explained in section 8 and section 9, regarding specific transactions. If you issue invoices which give all the necessary details then, as long as you keep copies, youll only need to prepare a summary of your invoices. If as an agent, you charge a customer a booking fee, for example, for making a hotel reservation, then the fee is consideration for making the booking, this does not change if the customer does not take up the hotel room. Theres no set format for a VAT account as long as it contains the necessary information contained in Record keeping (VAT Notice 700/21). In such cases, particularly if your principal wishes to remain unnamed, you may receive and issue invoices in your own name for the supplies concerned. For more information see paragraphs 2.2 and 2.3 of Business promotions (VAT Notice 700/7). The VAT invoice must show the old rate of tax. These chapters provide essential guidance on the selection and framing of a consent strategy or alternatives to consent, such as an opt-out approach or waiver of the requirement for consent. If you make supplies that fall within the Tour Operators Margin Scheme, see Tour Operators Margin Scheme (VAT Notice 709/5) for details of how to convert the value of your purchases. If you retain a (full or part) payment for goods or services which your customer fails to take up, then VAT is due on the amount paid. You may be able to zero rate the supply if you make arrangements for: As an agent, you may sometimes take a minor role in a transaction, and simply introduce your principal to potential customers or suppliers (third parties). Insurance (VAT Notice 701/36) explains which insurance services are exempt and which are outside the scope of VAT, with or without input tax recovery. The guidance in Chapters 2.2, 2.3, and this Element should be considered in applying the guidance on consent included in Chapters 3.2, 3.3 and 3.4. You must continue to account for VAT in the period in which the normal tax point occurs. To work out the cost of the standard-rated supply including VAT: To work out the total cost, including VAT, of both supplies: To work out what proportion the standard-rated supply forms of the total cost: To work out the amount of the total price formed by the standard-rated supply: (h) Multiply (g) by (a): 0.6760 139 = 93.96. Allowances. A VAT-registered person supplies standard-rated goods or services for 100 plus VAT to another VAT-registered person. HMRC will not make any repayment where credit or debit notes do not meet the conditions at paragraph 18.2.3. But, sometimes the law says that the detailed rules on a particular matter will be set out in a notice or leaflet published by HMRC rather than in a Statutory Instrument. For information on methods of error correction, how to make a claim, time limits and unjust enrichment, see How to correct VAT errors and make adjustments or claims (VAT Notice 700/45). One reason for this may be to see the day to day operation of the business. If you are required to keep digital records then your VAT Return should also be submitted using compatible software. The evidence should be annexed or cross-referenced to the relevant invoice from your supplier and both should be retained. Reports, analysis and official statistics. Input tax when VAT paid on goods and services received before VAT registration, 12. Fees that relate to goods such as option fees or fees for transfer of title are not exempt unless the charge for them is 10 or less. You can also get help and advice about how to keep your VAT affairs in order from members of the tax accountancy profession. You may find it helpful to read these simple introductory notices before you use this guide: If you make retail sales or provide services to the public, there are a number of special retail schemes which you may use to work out the VAT on your supplies. This means that if your supply of the contents is zero-rated, then zero rating also applies to the packaging. How do I find a particular department? HMRC aims to provide information and advice that will give certainty to customers concerning the tax consequences of their transactions, their obligations, liabilities and entitlements. Dont worry we wont send you spam or share your email address with anyone. To get HMRCs view of a transaction, apply for a non-statutory clearance. Zero rating, reduced rating and exemption, 32. For more information see Partial exemption (VAT Notice 706). If theres a single surviving partner and that partner decides to continue the business as a sole proprietor, they should notify the VAT Registration Service within 30 days of the change taking place. You must issue fresh VAT invoices for the payments due after the change, showing tax chargeable at the new rate. This example illustrates the invoicing procedure. You can work out the tax values and the tax due like this: (b) Normal price for zero-rated supply 50, (c) Normal price (including VAT) for standard-rated supply 200. Prompt and correctly completed returns and payments are the best way of avoiding trouble. The rate of VAT chargeable is that in force when the Excise Duty is paid. For more information about the VAT treatment of supplies of goods between Northern Ireland and EU, and the conditions you must meet to zero rate your supplies, see The single market (VAT Notice 725). If you receive an invoice from an unregistered person and knowingly use it to reclaim VAT, youre committing an offence. section 6 of VAT Notice 700/1: should I be registered for VAT? But, theres no requirement to employ an accountant and if you choose to do so, responsibility for the accuracy of your VAT affairs remains with you, the taxable person. Nevertheless, as an accounting convenience, HMRC permits operators to delay accounting for VAT until the takings are removed from the machine. But, if you merely pay amounts to third parties as the agent of your client and debit your client with the precise amounts paid out, then you may be able to treat them as disbursements for VAT purposes, and exclude these amounts when you calculate any VAT due on your main supply to your client. But, if the input tax you can reclaim is more than your output tax, you can reclaim the difference from HMRC. Where HMRC notifies you of a decision relating to your VAT, and you disagree, you may be able to challenge the decision. Any change will apply from a widely publicised date. Once you submit the relevant return, with your declared amount of tax, the assessment is withdrawn and the tax owed is that declared by you on your return. Section 29 tells you about the areas of business where some supplies may be exempt, reduced-rated or zero-rated. assessment of tax by HMRC, or the amount of an assessment, or, the amount of input tax which may be reclaimed, or, refusal to allow the use of one of the schemes described in, HMRCs directions about the value of supplies of goods and services. The amount paid includes tax. HMRC may impose a penalty if you send us a return or other document that contains an inaccuracy and that inaccuracy: HMRC may impose a misdeclaration penalty if an error is made on a VAT Return which was due before 1 April 2009. The solicitor uses the information in order to give advice to the client and the recovery of this outlay represents part of the overall value of the solicitors supply. Remember that if youre away from your place of business, you must make arrangements so that your return is received and payment clears to HMRCs bank account on time. To work out the proportion which is business income: To work out how much of the VAT you have paid you can treat as input tax: This is your provisional input tax for the VAT period. You may also be able to claim refunds of VAT or similar turnover taxes incurred in other countries. You can ignore any fraction of a penny. The VAT fraction (see paragraph 7.3.1) of the money removed is your output tax. For information on prompt payment discounts and how to show them on a VAT invoice, see paragraph 18.2.2. If you have to make an adjustment for credits you have allowed your customers (see paragraph 18.2), you should deduct the VAT on these credits from the amount of VAT PAYABLE in your VAT account (see paragraph 19.11) You must show the following details on any VAT invoice you issue: If you supply goods from Northern Ireland to a customer in an EU member state, then where the supply is zero-rated or exempt, your invoice must also show the reason for that. Otherwise, you should both adjust the original VAT charge. If you consider that it is not suitable for your circumstances you can use any other formula, provided it produces a fair and reasonable result. Buildings and construction (VAT Notice 708) explains when work to convert buildings for residential or charitable use may be reduced-rated. The VAT general enquiries helpline deals with all general phone enquiries from both businesses and the public about VAT. it does not exceed the statutory maximum fee. The period covered by the return is called a tax period (but on formal documents it may be referred to as a prescribed accounting period). This includes any zero-rated or exempt supplies. Cable cars carrying 10 passengers or more are already zero-rated as passenger vehicles. If youre a selling agent and the supply youre arranging on behalf of your principal is taxable, your supply of services to your principal in arranging that supply is standard-rated. If there are any changes to that information, you must notify the VAT Registration Service. If the consideration for a supply is wholly an amount of money, the tax value is based on that amount. Your client may also be prevented from doing so because the client does not hold a valid VAT invoice. But, if you want to, you may adopt the alternative VAT treatment set out in this section for your domestic transactions. But, you should note that these rules apply to supplies of goods and services. For more information see the VAT: costs or disbursements passed to customers guide. The time limit for claiming deduction of input tax is 4 years from the due date for the return on which you were first entitled to claim deduction of the input tax. The following are examples of supplies which might, for accounting purposes, be charged or itemised separately, but which cannot be treated as disbursements for VAT purposes: A solicitor pays a fee to a bank for the transfer of funds telegraphically or electronically to, or from, the solicitors own business or client account. If you fail to make a return when its due or make an incomplete or incorrect return, HMRC has powers to assess, to the best of its judgement, the amount of VAT you owe. As a UK undisclosed agent thats treated as a principal, youll be entitled to recover import or acquisition VAT in Northern Ireland, subject to the normal rules. These are either orders made by the Treasury or regulations made by HMRC. For a full list of zero-rated supplies, see paragraph 29.2. The tax point for what is a genuinely contingent element of the contract price is the receipt of the payment, or issue of a VAT invoice, whichever happens first. If your input tax is greater than your output tax, you reclaim the difference from HMRC. Your main responsibilities as an employer. If you have been given approval to use special tax periods, HMRC will provide you with a new VAT registration certificate on your business tax account. Apportionment is only necessary if the price you charge is the only consideration for the supplies (see paragraph 7.3). You must issue a VAT invoice to a registered person unless: You must not issue VAT invoices for any goods sold under one of the VAT second-hand schemes (see paragraph 8.5). If HMRC considers that you have a good reason, you may, exceptionally, be allowed to estimate your input tax or output tax, or both. For more information see the following VAT notices: Where imported goods are supplied between the time of their arrival in the UK and the time when an import entry is delivered to HMRC, and the new owner of the goods is required to make the import entry, the supply should be zero-rated. For general information about how to pay VAT to HMRC see paragraph 21.3. To be within the UK VAT system a supply must be made in the UK. When services that you acquired wholly for business use are put to a private or other non-business use, you make a supply of services and must account for output tax. The payment cannot be reclassified if the supply is unfulfilled, so cannot be treated as outside the scope of VAT. From time to time, the VAT rules change or are rewritten to make the guidance clearer. If the transfer of a going concern results in a new registration, you can apply to retain the tax periods of the previous registration. For more information see Gold acquisitions, imports and investments (VAT Notice 701/21) and VAT Notice 701/21A: investment gold coins this contains a list of investment gold coins. Most business transactions involve supplies of goods or services. It also gives information about various services provided by site operators and mooring owners. You must be sure that the supplier was registered for VAT. (c) value of any exempt supplies you have made For more information see Excise Notice 452: Machine Games Duty. Comments and suggestions. You do not need any approval to account for import VAT on your VAT Return. In most cases where HMRC suspects dishonest evasion of VAT, HMRC will investigate with a view to the imposition of a civil penalty. See Notice Imports (VAT Notice 702), section 8. The personal representative carrying on such a business must notify the VAT Registration Service within 21 days of starting to do so, giving details of the date of the death, or the nature of the incapacity and the date that it began, as appropriate. 13 March 2020. If youre still unhappy, find out how to complain to HMRC. For more information see Imports (VAT Notice 702). If you choose not to use a credit note, the original invoice must have the following information: HMRC recommends businesses use the following wording on the invoice: A discount of X% of the full price applies if payment is made within Y days of the invoice date. Alternatively you can call the VAT general enquiries helpline. But this will depend on the evidence held to show that the supply or transaction occurred and that the supply has been made to the person claiming the input tax. If after youve issued such an invoice, you actually supply the goods or services to your customer, or receive payment, then you must issue a proper VAT invoice. 8:00 am to 6:00 pm Monday to Friday Not-for-profit organisations. Remember there are restrictions to when you can correct net errors by adjusting your VAT account. The cost sharing exemption applies only in very specific circumstances and will not cover all shared service arrangements. For more information see Default surcharge (VAT Notice 700/50). For example, you can call the service if you have a question about: Businesses with a dedicated team in HMRC can still contact that team for information and advice. For more general information see Charities (VAT Notice 701/1). If you disagree with HMRCs decision about VAT, 29. Where supplies take place in the UK, the supplier may be liable to register here and account for VAT on their supplies. This explains how far you can treat your supplies as exempt. Officers aim to carry out their duties with as little inconvenience to you as possible. For more information about these services see Place of supply of services (VAT Notice 741A). If you receive a payment which is not returnable, this will normally indicate that the goods have been adopted. You must not use these provisions if you have issued a VAT invoice under an approved self-billing arrangement (see paragraph 17.4.1) or when goods are sold from the assets of a business in satisfaction of a debt (see paragraph 18.4). If thats the way you account for VAT, this paragraph does not affect you. Input tax is the VAT youre charged on your business purchases and expenses, including: This guidance explains the basic rules about input tax. In such cases, provided that the supply can be apportioned: you may, if you wish, charge tax at the old rate on the part of the work which was performed before the date of the change and at the new rate on the part which was, or is to be, performed on or after that date. FAQs. As in the case of imported goods, your commission is seen as subsumed in the value of the onward supply. For more information on time limits and how to correct errors see How to correct VAT errors and make adjustments or claims (VAT Notice 700/45). There are financial penalties for the unauthorised issue of VAT invoices. Protective equipment (VAT Notice 701/23) gives details of the reduced rate for childrens car seats. HMRC is prepared to treat such minimal use as being insignificant for VAT purposes and it will not prevent a business treating all the tax it incurs on calls as input tax. Section 32 explains how you work out how much VAT you can reclaim. Under any of these types of agreement theres a single supply of goods, and the normal tax point is the earliest of the date of: At the time of a change you may apply the tax rate in force at whichever of these dates provides a lower rate of tax being chargeable on the supply. The mere signing of an agreement, or its date, does not in itself constitute a tax point. Generally speaking, this notice and the other VAT notices explain how HMRC interprets the VAT law. You should also make urgent contact with your bank and your financial adviser. You should have no problem finding out from your suppliers whether theyre registered. If the personal representative requires any further advice they should contact the VAT Registration Service. Suitable evidence might include: If youre a cash and carry wholesaler, you can adapt the till rolls produced by your cash registers to serve as VAT invoices, provided that you meet all the following conditions: If you cannot meet these conditions, you must issue a full VAT invoice when a customer asks for one, showing all the details required by paragraph 16.3. you must account for output tax on the onward supply to the customer, and, the supplier should issue the VAT invoice made out to your principal and send it either direct, or through you, for you to pass on to your principal and. VAT is not due on certain gifts. This will apply until such time as another person is registered in respect of the taxable supplies concerned, or, in the case of incapacity, the person concerned is able to continue with their business. For more information see Excise Notice 452: Machine Games Duty. Note, the concession in this paragraph to round down amounts of VAT is designed for invoice traders and applies only where the VAT charged to customers and the VAT paid to HMRC is the same. For example, an add-list would be acceptable as a summary if it shows tax and values separately itemised in the order in which you keep the VAT invoices. Health professionals and pharmaceutical products (VAT Notice 701/57) explains the treatment of contraceptive products, which may be standard-rated, reduced-rated or exempt, depending upon the circumstances. From the health of the city and its people, to managing the environment and the health of our waterways we're helping to create a better life for Greater Sydney. If youre treating as input tax the VAT on goods or services supplied to you: (a) the invoice can be made out to an employee for subsistence expenses mentioned in paragraph 12.1 and for petrol (see Motoring expenses (VAT Notice 700/64)). Read How to correct VAT errors and make adjustments or claims (VAT Notice 700/45) for more information on how to correct VAT errors and make adjustments or claims. Quick Links: Rates Get Pre-Qualified Connect with Account Executive 1.866.GUIDANCE. You can work out your input tax like this: (b) Income from business activities 20,000. Financial penalties and interest charges, 28. You notify the VAT Registration Service if: If you had a place of business or an agent in both countries at the time you were registered, you must give notification of any major change in the functions carried out at either address. This may be a written or oral agreement, or merely inferred from the way you and your principal conduct your business affairs. When theres a change in tax rate or tax liability, tax is chargeable in accordance with the normal tax point rules as set out in sections 14 and 15 of this notice, unless you decide to adopt the special change of rate provisions shown in paragraph 30.7.2. In order to account for VAT on these sales you can either: If you use VAT MOSS, you can register once for VAT for all B2C supplies of digital services you make in the EU. It is not appropriate for businesses to adopt an alternative treatment of accounting for output tax on the private use. Time of supply (tax point) in other situations, 17. Theres a 4-year time limit on making a claim. This is because here, VAT is already included in the price. If you foresee any difficulty, your best course of action is to contact HMRC if you cannot pay your tax bill on time. Zero rate tools that manufacture goods for export (VAT Notice 701/22) deals with the liability of supplies of certain tools to overseas customers, where the tools are used in the UK solely for the manufacture of goods for export. This might happen because of a change in the law or in its interpretation. Where solicitors charge you VAT for their services, there are only 2 options open to you, you may choose: If in the particular circumstances of any case, you consider that youre acting as a principal, then you may recover as input tax any VAT charged to you by the solicitor, subject to the normal rules. See VAT Notice 714: zero rating young childrens clothing and footwear. Detailed guidance, regulations and rules. The reduced rate only applies to the supply and installation of the following items: But, the reduced rate does not apply to any repairs or maintenance of those goods once they have been installed. The tax points for continuous supplies of goods or services (including the supply of goods on hire, lease or rental) are described in paragraph 14.3 of this notice. If you transfer your business as a going concern you need to know the correct VAT treatment. Guidance manual VAT Water and Sewerage Services explains which supplies of water and sewerage services are zero-rated and which are standard-rated. your principal must issue the VAT invoice made out to the customer and send it either direct to the customer, or through you to pass on to the customer, your principal is not registered for VAT but youre VAT registered. If you supply goods or services to government departments (including health authorities), non-departmental public bodies, local authorities, embassies, foreign missions or international organisations in the UK, you should charge and account for VAT in the usual way. Conversely, you may, if you wish, account for tax at the new rate on that part of the supply made after the change, even though the normal tax point occurred earlier (for example, where a payment is received in advance of the supply). There are examples here of both these methods, including an example of apportionment where you can only determine the cost of one of the supplies. For more information see Health institutions supplies (VAT Notice 701/31) and VAT Notice 701/57: health professionals and pharmaceutical products. Provided the price charged does not exceed the levy and is remitted to the Northern Ireland Environment Agency, no VAT is due. But, in cases where the amount to be paid has still to be agreed at the time the land is transferred to the purchasing authority, the tax point is the date payment is eventually received. Supplies of accommodation are generally standard-rated. Businesses can choose any apportionment method that suits their individual circumstances providing the method chosen produces a fair and reasonable result. Supplies of land made as a result of a compulsory purchase order are subject to the normal tax point rules. If you give away, or put to private or other non-business use, goods which you have acquired or produced in the course of your business, VAT is due on cost and you need record only the: If you use a retail scheme, this paragraph applies only where the credit involves a VAT invoice. You supply services if you do something, other than supplying goods, for a consideration. More information about digital record keeping can be found in VAT notice 700/21. Note, for the purposes of the following illustration, the price paid by the final customer is 100, the commission retained by the agent is 20, and the money passed back to the principal is 80, all net of VAT. Its available to businesses with a VAT-exclusive annual taxable turnover of up to 150,000 but you need to apply and be approved by HMRC before you use it. If you fail to do so, you will be in default and you may have to pay a surcharge. This section tells you what to do if you: When you allow a credit or contingent discount to a customer who can reclaim all the tax on your supply as input tax, you do not have to adjust the original VAT charge provided both you and your customer agree not to do so. For more information see Annual accounting (VAT Notice 732). If you incur input tax that is related to exempt supplies as well as taxable supplies, youre termed as partly exempt and you probably will not be able to claim all your input tax. Your evidence should show that a supply occurred on which VAT was charged. An article is a gift where the donor is not obliged to give it and the recipient is not obliged to do or give anything in return. Supplies made by or through agents: other situations, 27. Special rules apply if youre a body covered by section 33 of the Value Added Tax Act 1994. To help you work out when you need to set up your payments (such as setting up a Direct Debit Instruction) or when you need to make your VAT payments, you can use the VAT payment deadline calculator. But, if your service is of an expert type, such as consulting or advising on matters such as provenance, value, how to sell, then your supply may be outside the scope of UK VAT, depending on where the seller of the goods belongs. This includes goods you have imported or removed from a tax warehouse and any of the services which you have received from abroad which are supplied in the UK. becomes the owner of goods (for example, when a purchase is financed by a hire-purchase agreement). The penalty for conduct involving dishonesty is described in paragraph 27.5. It has no impact on the legal status of agents or the way theyre treated for the purposes of other taxes or legislation. special transactions youre involved in as described in paragraph 19.4.2 and paragraph 19.4.3. date that the goods were given away, taken, or set aside for non-business use, phone calls from public or private phones, car-park charges (on-street parking meters are not subject to VAT), a single or return toll charge paid at the tollbooth, use a tolled road, bridge or crossing under an arrangement where you pay in advance for your journeys, or you are invoiced in arrears for your journeys, or a combination of the two (for example, if you use an electronic tag or if you are an account customer), evidence of VAT on goods imported or removed from warehouse (see, evidence of services received from abroad (see, goods imported by post other than by Data post with a value of 2,000 or less (see also, any services which you receive from abroad which are supplied in the UK, credits received from suppliers for all taxable supplies you receive (see, supplies you receive for your business on which VAT is not deductible (see, act as an agent in arranging supplies of goods or services, distributors, sole concessionaires and motor agents usually trade as principals on their own account, employment agencies and travel agents are not usually agents in all their activities, it must always be clearly established between you and your principal, and you must be able to show to HMRC that youre arranging the transactions for your principal, rather than trading on your own account, you will not be the owner of any of the goods, or use any of the services which you buy or sell for your principal, you will not alter the nature or value of any of the supplies made between your principal and third parties, supplies made between your principal and the third party, supply of your own services to your principal, for which you will charge a fee or commission the normal VAT rules apply to your services as an agent, the export of any goods to a place outside the UK, a supply of services which is itself zero-rated as work on goods for export from the UK, any supply of services which is made outside the UK, make an onward supply in your own name to your customer for 100, you acted as the agent of your client when you paid the third party, your client actually received and used the goods or services provided by the third party (this condition usually prevents the agents own travelling and subsistence expenses, phone bills, postage, and other costs being treated as disbursements for VAT purposes), your client was responsible for paying the third party (examples include estate duty and Stamp Duty payable by your client on a contract to be made by the client), your client authorised you to make the payment on their behalf, your client knew that the goods or services you paid for would be provided by a third party, your outlay will be separately itemised when you invoice your client, you recover only the exact amount which you paid to the third party, the goods or services, which you paid for, are clearly additional to the supplies which you make to your client on your own account, VAT charged by solicitors for their services of pursuing the debt through the Court, fees paid by solicitors to the Court and recovered from the debtor, costs awarded by the Court against the debtor to cover the Court fees, the solicitors charges, where the agreement with the creditor allows the collector to retain these monies, not to recover the VAT as input tax, and simply treat the charges as disbursements in accordance with, to recover the VAT as input tax, subject to the normal rules, but recharge the fees plus VAT to the creditor under the terms of, the name or trading name of the business, or the name and address of any partner in the business, the composition of a partnership, even if one or more of the former partners remains in the partnership, the name and address of the UK agent for VAT purposes, appointed by an overseas company or resident, the address of the principal place at which the business is carried on, the status of the business from limited liability to unlimited liability, or vice versa, under section 49 or 51 of the, the bank account number, bank sorting code or Girobank account number of the business as it may take up to 14 days to process any change of repayment method, you should give enough notice to allow the change to be completed and note that any delay in notification may result in a repayment being made under the existing arrangements, the misdeclaration penalty for large or repeated errors, the penalty for evasion involving dishonesty, results in tax being unpaid, understated or overclaimed, was careless, deliberate or deliberate and concealed, secure the highest level of overall compliance, stop fraud and evasion at the earliest opportunity, collect the unpaid tax or repayment made, plus related penalties and interest, make sure, as far as possible, that the fraud does not recur, the evasion involves a registration of one or more businesses whose activities are solely, or primarily, bogus or undertaken as a systematic fraud against the tax, there is, during the course of investigation of a civil offence, a deliberate intent to deceive, the evasion is perpetrated by lawyers, accountants or others who advise businesses about VAT matters current or former tax officials or a person who occupies a prominent position in the field of law or government, the evasion is executed together with other criminal activities, including the evasion of other taxes or duties, theres been a previous VAT or customs or excise offence which was concluded by the imposition of a penalty, the compounding of proceedings or a criminal conviction, where theres a conspiracy to evade VAT, other than by persons within the same legal entity, where the evasion is perpetrated by an undischarged bankrupt, in circumstances where HMRC has directed that a security should be given under, in broad terms, the areas of business where you will need to check the liability of your supplies, which other notices you should refer to if youre involved in any of the areas mentioned, advertising supplied to charities zero-rated, see, goods donated to a charity for sale by them zero-rated, work to construct a dwelling, residential or charitable building can be zero-rated, the sale or long lease of dwellings, certain residential buildings (such as care homes) and certain buildings used by charities is zero-rated, work to convert buildings may be reduced-rated, health professionals and pharmaceutical products, VAT reliefs for disabled and older people, freight transport and associated services, built-in shower seats or showers containing built-in shower seats, physical or mental welfare of elderly, sick, distressed or disabled people, care or protection of children and young people, supplies provided in connection with these services, dealings in money and assignment of debts, stocks, shares, bonds and other securities, other specialised services related to holding and trading these securities, medical and dental care provided by health professionals exempt, insurance related services performed by brokers and agents, 1 April VAT invoice issued or payment received, the identifying number and date of issue of the credit note, your name, address and registration number, the identifying number and date of issue of the VAT invoice, in accordance with your normal costing or pricing system, issue of the agreement (provided the agreement is in the form of a VAT invoice), the VAT on purchases which will be used wholly for either business or non-business purposes and deal with this as set out above, purchases on which you can never reclaim input tax (see, you pay 1,000 VAT on purchases which are used for both business and non-business purposes, your income from business activities (taxable and exempt supplies) amounts to 20,000 per year, your total income from all sources, including business activities, grants and donations, amounts to 50,000 per year, keeping a record of the use made of an object (for example, a yacht or aircraft), keeping a record of the time spent by employees on business and non-business activities, calculating within a building the extent to which the floor area is used for business and non-business purposes. But, if youre using a VAT MOSS return to make your declarations and payments on business to consumer supplies of digital services, you can correct your return up to 3 years and 20 days after the end of the relevant period. For more information see Capital Goods Scheme (VAT Notice 706/2). For more information see Notice 60: Intrastat general guide. But you may also reclaim as input tax any VAT charged on the supply made to you. If youre a UK undisclosed agent involved in international services and you act in your own name under section 47(3) VAT Act 1994, youre treated as a principal. If you issue a credit note or supplementary invoice to correct an error in a VAT invoice, it should bear a reference to the number and date of that VAT invoice and show clearly both the correct and incorrect amounts of VAT. You should show the value of the supply to or acquisition of goods from EU member states in boxes 8 or 9 respectively of the VAT Return. Then, under the Employment menu, go to New employment, and you can complete your Tax file number declaration online. For more information see Relief from VAT on bad debts (VAT Notice 700/18). Any change in the tax rate or liability will be effective from a specific date. You may sometimes be empowered by your principals to enter into contracts with a third party on their behalf. This is a list of standard abbreviations for statutory references. Quarterly non-standard tax periods must end 20 days either side of a standard tax period date. Theres a compulsory minimum charge for single-use carrier bags in England, Scotland and Wales. Subject to the normal rules the seller can reclaim input tax of 2.00. For more information see Goods exported from the UK (VAT Notice 703) and the individual scheme notices. If you want to work out the VAT per unit or per article (for example, for use in price lists), you must work out the amounts in one of the following ways: Most retailers account for VAT using a retail scheme. Its the practice in some trades and professions for some or all of the costs incidental to a supply, such as travelling expenses, to be described as disbursements and shown or charged separately on the invoice issued to the client. For supplies received on or after 1 January 2003 youre required to repay any input tax you have reclaimed if you have not paid your supplier within 6 months of the: (a) date of supply (usually taken as the invoice date) For more information on this and other methods of payment, see VAT Notice 700/12: how to fill in and submit your VAT Return. HMRC has to take action to counter this and will continue to do so. If you offer a customer an unconditional discount, and the customer pays the discounted amount, then the tax value is based on the discounted amount. For more information about EC Sales Lists see The single market (VAT Notice 725). If you correct an error in the amount of VAT chargeable with your customer (for example, by issuing a credit note or supplementary invoice to the customer), the correction should be allowed to work through your accounting system. You may round down the total VAT payable on all goods and services shown on a VAT invoice to a whole penny. It covers the VAT implications for supplies of: Investment gold is exempt from VAT, subject to an option to tax. You can work out the tax point for any zero-rated or exempt supply you make using the tax point rules set out in the preceding paragraphs in sections 14 and 15, though references to the issue of a VAT invoice do not apply to such supplies. If you use goods or services in your business, which the business itself has made or acquired, no VAT is normally due. Employer identification number Part II Certification. To act as an agent, you must have agreed with your principal to act on their behalf in relation to the particular transaction concerned. Alternatively you can write to the VAT Registration Service. When this is a taxable supply, the proceeds of the sale are treated as tax-inclusive and tax must be accounted for as follows. To find out when you can rely on that information or advice, see the guide When you can rely on information or advice provided by HMRC. ARM interest rates and payments are subject to increase after the initial fixed-rate period (5 years for "Sinc The staff costs are part of the value of the supply by the restaurant and VAT is due on the full amount. The cost of the supply is determined by reference to the standard-rated costs of making the deemed supply (see paragraph 9.3.2). For example businesses could analyse a sample of bills taken over a reasonable period of time and use the same ratio for future VAT recovery on mobile phone bills. If theres no consideration for the supply, VAT is due on the cost of the supply. We also use cookies set by other sites to help us deliver content from their services. How VAT affects charities (VAT Notice 701/1) gives more information on non-business activities for such bodies. As a registered person, you can reclaim from HMRC as much of the VAT on your purchases and imports, as relates to the standard-rated, reduced-rated and zero-rated supplies you make. You can claim interest where, as a result of an error on HMRCs part you: You can claim for the period of time during which you have not been able to use your money. If you need to convert an amount from a foreign currency into sterling, you must do so on the following basis: (a) unless you have adopted one of the alternatives set out in (b) or (c), you must use the UK market selling rate at the time of the supply the rates published in national newspapers will be acceptable as evidence of the rates at the relevant time, (b) as an alternative, you may use the period rate of exchange published by HMRC for customs purposes the VAT general enquiries helpline can give you details of particular period rates, you may adopt this alternative for all your supplies or for all supplies of a particular class or description if you opt for only a particular class or description, you should make a note of the details in your records at the time of adoption, You do not need to notify HMRC in advance if you wish to adopt this alternative, but having made such an option, you cannot then change it without first getting agreement by writing to the VAT Written Enquiries Team, (c) you may apply in writing to the VAT Written Enquiries Team to use a rate or method of determining a rate which you use for commercial purposes but which is not covered by (a) or (b). The National Disability Insurance Agency acknowledges the traditional owners and custodians of country throughout Australia and acknowledges their continuing connection to land, sea and community. If this procedure reduces the liability to tax of a supply for which a VAT invoice has already been issued at a higher rate, you must issue a credit note in accordance with paragraph 30.7.5. The arrangements in this paragraph apply if auctioneers offer goods for sale as an agent for the seller. For increases in price this will be when the supplier and customer reach agreement over the increased value of the supply. There are a number of conditions to meet before HMRC will issue its view of a transaction (see the checklist in Annex D of the non-statutory clearance service guidance.). Full stops are used in law to indicate abbreviations. This is the VAT-inclusive price of the standard-rated supply. Otherwise you may find that you are not accounting for VAT properly. This notice is the main reference guide to VAT, it provides: a guide to all the main VAT rules and procedures Goods sent from Great Britain to the Isle of Man or vice versa do not count as imports or exports for VAT purposes. You should carry this amount forward to the VAT payable side of your VAT account (see paragraph 19.11). Also an invoice issued for a zero-rated or exempt supply does not create a tax point. There are 16 critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof. For more information see Who should register for VAT (VAT Notice 700/1). VAT Notice 701/57: health professionals and pharmaceutical products explains that the dispensing of drugs, medicines and other items to patients by a pharmacist or doctor is zero-rated in certain circumstances. Estimated monthly payments shown include principal, interest and (if applicable) any required mortgage insurance. To work out the amount of VAT in a VAT-inclusive price, you have to multiply the price by the VAT fraction see paragraph 7.3.1. The amounts you pay to solicitors for Court fees may be treated as disbursements made on behalf of the creditor, which are outside the scope of VAT. It will not benefit every business so, before you apply, you should see VAT Notice 733: Flat Rate Scheme for small businesses for more information. This paragraph explains when VAT is due if goods are lost, stolen or destroyed. Guidance about credits and debts has been updated. For a full list of reduced-rated supplies, see paragraph 29.3. Due to the unfolding situation with COVID-19 and a higher than expected number of phone calls, ICE will contact you with updated information on how to proceed with your scheduled check-in. It should then be reflected in an adjusted total of output tax due from you, at the end of the tax period in which the error was corrected. Persons who carry on a business on their own account sometimes use the words agent and agency to describe their trading style. Competition prizes are usually treated as gifts. In addition to penalties, you may also be charged default interest on undeclared VAT. This procedure is explained in detail in VAT Notice 735: VAT domestic reverse charge on specified goods and services. Last modified: 16 Sep 2022 QC 16161 Youll need to adopt a partial exemption method to calculate how much input tax you can recover. If you make an agreement to supply goods in any of the ways outlined, without involving a finance company, which means youre self-financing the credit, your charge for credit will be exempt from VAT if its disclosed as a separate charge to your customer. This is known as electronic invoicing. Check out this resource for additional guidance. The agent should account to HMRC for 23.00 output tax. All revised editions and updates are published on the VAT pages. See section 5. Cents-per-mile rule. VAT is chargeable in the Isle of Man under Manx law which generally matches UK legislation. The basic tax point for a freehold sale is the date of the completion of the conveyance. 8:00 am to 6:00 pm Monday to Friday. (f) amount of VAT due on imports not subject to PVA. Its also a tax on the importation or acquisition of most goods and of some services received from outside the UK. For more information see Local authorities and similar bodies (VAT Notice 749). See also The single market (VAT Notice 725) for the tax value of acquisition of goods and Imports (VAT Notice 702) for the tax value of imported goods. You cannot normally reclaim VAT you have been charged: You reclaim your input tax by deducting it from your output tax when you complete your VAT Return. You must include the value of the supply in your VAT account and on your VAT Return as a supply both made, and received, by you. The application of this provision in any particular case depends on the terms of the contract between the parties concerned. So you need to give your account details to HMRC even if youve already set up a direct debit for VAT Returns. See Business promotions (VAT Notice 700/7) or the special rules for this kind of supply. You might offer someone a gift on condition that they: Goods and services supplied in these circumstances are not true gifts and VAT is due on the basis explained in paragraph 7.4. Only RFID Journal provides you with the latest insights into whats happening with the technology and standards and inside the operations of leading early adopters across all industries and around the world. Machine games that are liable to Machine Games Duty are exempt from VAT. Depreciation + costs in the relevant period (private use total use). If you issued a VAT invoice before the date of the tax change and apportionment reduces the amount of tax due, you must issue a credit note in accordance with paragraph 30.7.5. Alternatively, you may find the method described in paragraph 19.7.3 more suitable. Do not include any personal or financial information like your VAT number. Theres been changes to the standard and reduced rates, plus a briefly introduced higher rate, and these are: Some supplies of goods and services are charged at the reduced rate. Non-standard tax periods can either be monthly or quarterly. Help and information to keep people safe and healthy at work. You can work out the VAT and the tax values like this: To work out the value of the zero-rated supply: (c) Add an uplift to (b): 28 + (say) 50% = 42. You may be liable to a financial penalty if you do not issue a VAT invoice when asked to do so by a taxable person. For more information see: For each tax period you must keep a summary of the totals of your output tax and input tax. If you use a capital item to make VAT exempt supplies, or for non-business purposes, the VAT incurred on the cost of the item may be subject to adjustments under the Capital Goods Scheme. It also addresses the zero rating of work to construct new buildings and the zero rating of sales of long leases in new buildings. If you import goods, you should read Imports (VAT Notice 702) and How to use your duty deferment account. (c) The VAT-exclusive value of all supplies you have received. 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