VAT Receipts

Jezclayton · May 5, 2008

Having spent most of the weekend sorting out the business purchase invoices, I am constantly baffled as to how often no VAT receipt has been provided. I thought part of the deal in being VAT registered was that you had to provide a VAT receipt/Invoice.

Why is it that Garages, for example, who charge VAT on fuel are not required to produce a VAT receipt automatically and instead produce two slips, with the VAT slip only being given if requested? Surely one slip would do?

The same applies to online retailers/service providers. So often they charge VAT, don't provide any form of receipt and a visit to "My Account" merely produces a list of transactions clearly marked "this is not A VAT receipt".

Government bodies seem as bad, gladly taking money but not providing a receipt.

Finally the VAT inspector comes round and moans about my claiming VAT on fuel purchases because I haven't got VAT receipts.

F****ing Bo**ocks to the lot of them. I'd like to see them buy diesel without paying VAT. To be fair, she didn't pursue the matter once she noticed I was not best pleased.

Fernhurst Solutions Ltd · May 5, 2008

you needed to get that off your chest ..... didnt you!! ha ha

Jezclayton · May 5, 2008

Fernhurst Accountancy Solutions said:
you needed to get that off your chest ..... didnt you!! ha ha

Damned right I did. Who wants to spend a bank holiday weekend preparing for a return visit by the VAT office?

What is the answer on fuel receipts etc.? Why don't the garages provide them automatically?

Philip Hoyle · May 5, 2008

Garages are retailers so don't have to automatically issue VAT invoices:-

From HMRC's website (http://www.hmrc.gov.uk/vat/records-valid-invoice.htm) -

"If you are a retailer, you do not need to issue a VAT invoice or receipt unless asked to do so by the buyer. "

Jezclayton · May 5, 2008

Philip Hoyle said:
Garages are retailers so don't have to automatically issue VAT invoices:-

From HMRC's website (http://www.hmrc.gov.uk/vat/records-valid-invoice.htm) -

"If you are a retailer, you do not need to issue a VAT invoice or receipt unless asked to do so by the buyer. "

Philip, thank you very much for that. It has bugged me for ages and now I have the answer.

Seems the HMRC have me bang to rights. Just as well I use one garage and they have kindly offered to issue me with retrospective receipts, to which HMRC have on this occasion agreed.

I will now look up the definition of a retailer.

HC-Martin · May 6, 2008

What about mobile phone companies......they're just as bad. Anyone know how you can get a VAT receipt from O2?

3pic · May 7, 2008

John Lewis are even worse - you have to go in store and go to Customer Services to get a VAT receipt.

As for O2 or indeed any business, for sales to consumers (ie, not a business), they are not obliged to provide a VAT receipt if under £250 BUT they must provide one if requested by the customer.

Many small businesses will take out a mobile contract in their own name and so mobile provider will not automatically provide a VAT invoice. Indeed, check your mobile bills and it will clearly state "This is not a VAT invoice" so if you reclaim the input tax on it - you may find HMRC will want that VAT back as you've not got a proper VAT invoice.

Alpha · May 7, 2008

3pic said:
Many small businesses will take out a mobile contract in their own name and so mobile provider will not automatically provide a VAT invoice. Indeed, check your mobile bills and it will clearly state "This is not a VAT invoice" so if you reclaim the input tax on it - you may find HMRC will want that VAT back as you've not got a proper VAT invoice.

This is the one thing that I find hard to understand. They give an invoice with full vat details and yet HMRC can take issue with and disallow it because it has that one line on it

Can you enlighten us as to why?

3pic · May 7, 2008

It all do with the Time of Supply.

A business has to pay the VAT over to HMRC at a specific time. For goods, the actual tax point is created when either a VAT invoice is issued (April 01 say) by the supplier or when the goods are dispatched/received by the customer (whichever is the soonest).

So a large company on monthly VAT returns can invoice customer in April but not declare any VAT over to HMRC until the May VAT return by delaying delivery of goods - by which time customer will have paid (if payments terms are 14 days or so) and so huge cashflow benfits for the business.

For services, it is a little different and I give an example :-

The landlord rents out a shop. Three months' rent is due in advance on the quarter days of 25 March, 24 June, 29 September and 25 December. He issues a 'payment request note' (rather than an invoice) which states 'This is not a VAT invoice'. The supply by the landlord is 'continuous' and is never actually 'performed', unless the lease agreement is terminated. The actual tax point is created by payment or issue of a VAT invoice. By not issuing a VAT invoice until payment has been received, the landlord avoids accounting for VAT on the rent before the rent has been received.

So for mobile phone companies they only have to declare the VAT once they receive payment from the customer or when they issue a VAT invoice - whichever comes first. Usually you will have a DD to collect your monthly contractual phone payment and so the VAT is only due to HMRC when O2 receive the cash into the bank.

Also, becuase they have not actually issued a proper VAT invoice, should the account default they do not have to wait 6 months before they can reclaim the VAT paid over to HMRC under Bad Debt Relief rules...because they haven't actually paid the VAT over as yet as they've not issued a proper VAT!!. Double bonus!!.

For small firms, they end up raising and invoice and paying the VAT over BEFORE they get paid by their customer meaning business is subsidising the VAT payment to the VATman until the client pays and if client defaults the business has to wait 6 months before it can claim the VAT back.

Anyone can do this, but it can be administrativley difficult keeping track of invoices, payments made by clients, payments made to HMRC and only of benefit if on monthly returns and cashflow is a big issue.

Hope that answers the question!.

Alpha · May 7, 2008

3pic said:
It all do with the Time of Supply.

Hope that answers the question!.

Yes that answers it very well.Thanks.

So in summary we can create a load of procedural red tape so that businesses can avoid paying vat 'unnecessarily'

3pic · May 7, 2008

Sorry Alpha - didn;t actually answer your question (D'oh!).

It is not a proper VAT invoice becuase there is no evidence that the VAT was paid over to HMRC by the supplier - for that to happen, the supplier MUST issue a proper VAT invoice.

A "This is not a VAT invoice" is only a request for payment, not proof that you paid it NOR that the supplier has coughed up the VAT....and that VAT may be in different accounting periods and so HMRC don't like it when YOU reclaim the VAT in April (on a non-VAT invoice) as they are now out of pocket and HMRC only get the VAT back into their account in say June when O2 have received your payment so now HMRC are subsidising these two businesses!!!.

Petty, I know.

Alpha · May 7, 2008

3pic said:
Sorry Alpha - didn;t actually answer your question (D'oh!).

Petty, I know.

NO but I did work out the rest from the excellent examples that you gave

HC-Martin · May 7, 2008

3pic - Thanks for that! Cleared it up now!

Jezclayton · May 7, 2008

Does anyone know if HMRC actually picks up on this (i.e. small businesses not actually in possession of a proper VAT invoice from suppliers), or take a more human view ...that already sounds like a contradiction in terms!?

3pic · May 8, 2008

Jez,

You have answered your own question to a degree. Technically, the right to deduct (reclaim) input tax is on the basis that you have a valid VAT invoice/receipt to justify such a reclaim.

In my experience, if you have a receipt from say, Asda or B&Q they usually put an '*' or 's'/'z'/'r' next to VAT rated items so you should be okay to claim the VAT on those as the receipts also will have VAT No., head office address, etc.

Some other receipts from local merchants/corner shops may have a VAT number but not an address or not indicate if VAT has been applied or not (ie, no '*' or 's' or breakdown) and so these are slightly higher risk as you've not got the evidence they are VAT registered or even paying it over.

If the values are small don't worry about it becuase no HMRC Officer is going to spend a day sifting thrugh a box of receipts to identify £100 of dodgy reclaim, but if you use a local supplier a lot then may be worth asking for some more details on their receipts.

finally, it'll come down to how big a jobsworth you get on the day.

Jezclayton · May 8, 2008

Along with a review on everything else, we have now implemented procedures to ensure a VAT receipt is obtained in all instances.

A bit of discipline required to start with, but hopefully second nature after a while.

Thanks for your input.

wirralfinance · Jan 8, 2009

I am the process of setting up a export business.When i claim my zero vat will till receipts do ie from the likes of argos,tescos ?

David Griffiths · Jan 9, 2009

What do you mean by "claim zero VAT?" :|

If you mean normal standard rated VAT, a till receipt will do provided that it's for less than £250, has the retailer's VAT number on it, and clearly identifies the goods. Strictly a "less detailed tax invoice" should show the VAT rate against each line, but in practice that doesn't cause a problem.

Tom McClelland · Jan 9, 2009

If you have an invoice from a supplier with a VAT number on it, but no VAT breakdown is shown, are you allowed to calculate the VAT yourself if the goods are typical VAT ratable stuff by doing 15/115?

Kevin Hall · Jan 11, 2009

The invoice must still be a valid VAT invoice, even if it is a less detailed invoice. For example, the gross invoice amount should be under £250, the invoice should show the name and address of the supplier, the rate of VAT charged for each item (without which, how do you know if the supplier has charged 15%, 17.5%, or 0% VAT?), etc.

If the invoice is a valid VAT invoice, charging 15% on all items, you should indeed do precisely as you suggest.

Otherwise, be careful: a future inspecting VAT Officer might reject the VAT reclaim, depending on the circumstances. Best practice is to go back to the supplier and ask for a valid VAT invoice. If they are VAT registered, they are obliged to supply a valid VAT invoice on request.

Hope that helps?

wirralfinance · Jan 13, 2009

thx,if the vat invoice does not have my company name on it,is it valid for a vat claim back ie invoices from tescos, m&s etc dont have purchasers name and address on it.

elaine@cheapaccounting · Jan 13, 2009

what counts as a valid vat invoice can be found here:

http://www.hmrc.gov.uk/vat/records-valid-receipt.htm

Kevin Hall · Jan 13, 2009

... but for a less detailed VAT invoice, based on a till receipt, try this:

http://www.hmrc.gov.uk/vat/records-valid-invoice.htm#6

In other words, a less detailed VAT invoice would still be valid even if it does not have the customer's name and address on it. But it must satisfy the other conditions listed in the above weblink; and it must NOT state "This is not a VAT invoice" (which certain petrol stations do inexplicably - I've asked for an answer and get circular gibberish in response).

David Griffiths · Jan 13, 2009

And of course if it has somebody else's name on it, it's almost certainly not valid for you to recover the VAT.

wirralfinance · Jan 13, 2009

Thanks for that.Its just i rang hmrc and the lady on phone said that you need you company name and number on the vat invoice.

So just a general breakdown vat invocie will do ie its got the comanys name,address,vat number and the vat paid will do?

Kevin Hall · Jan 14, 2009

A standard "full" VAT invoice should be addressed to the correct customer and should contain their address. Elaine's links give you the full list.

However, for a less detailed (but nevertheless valid) VAT invoice, fewer details are required. For example, it is not necessary to have the customer's name and address on the invoice. But the gross amount of the invoice cannot exceed £250, and other conditions must be fulfilled (including showing the supplier's name, address, VAT registration number, rate of VAT and gross total).

So the HMRC lady was not wrong as such, but she was not telling you all the possibilities either.

Hope that helps?

wirralfinance · Jan 14, 2009

Thanks for all the help that clears a lot of things up.so as long as the total does not exceed £250 a basic vat invoice with retailers name ,address,vat number,item purchased and vat breakdown is a valid to claim vat back on?

Also if i am director of a company & vat invoice is in my name and address ( not the companys ) & the item purchased is for the business can i use that invoice for a vat reclaim on the business

Thanks in advance

Alanukbus · Jun 14, 2017

I decided to take the advice above and called EE, despite them both having promised me a VAT receipt when I started and then saying the normal receipts were fine for HMRC, I was told each contract (phone and data) would have a charge of £2 a month, not very sensible on a £10.00 contract? Do the VAT rules say that if a VAT receipt is requested the supplier can charge extra for this?

STDFR33 · Jun 14, 2017

Alanukbus said:
I decided to take the advice above and called EE, despite them both having promised me a VAT receipt when I started and then saying the normal receipts were fine for HMRC, I was told each contract (phone and data) would have a charge of £2 a month, not very sensible on a £10.00 contract? Do the VAT rules say that if a VAT receipt is requested the supplier can charge extra for this?

It's nothing to do with VAT rules.

It's about the contract / terms & conditions.

I'm sure that they will be covered to charge for such a service.

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