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Is there VAt on Bank charges?

Discussion in 'Accounts & Finance' started by dctrpl, Dec 24, 2008.

  1. dctrpl

    dctrpl UKBF Newcomer Free Member

    Posts: 127 Likes: 1
    Quickie for all the accountants taking a breather from their turkey...

    After a year of free-ness our business account has started deducting bank charges from our balance, monthly. Joy.;)

    But does the amount they charge include VAT????
    How does it go on the books?
    It IS a business expense, right?

    I would be grateful for any insight and Lots of Christmas Love to you all,

    Dctrpl:p
     
    Posted: Dec 24, 2008 By: dctrpl Member since: Dec 9, 2007
    #1
  2. Wild Goose

    Wild Goose UKBF Newcomer Free Member

    Posts: 1,340 Likes: 413
    No VAT

    Just analyse the payment to bank charges (or "other")

    Yes it is, although I have heard that might change in January when Gordon Brown offers all the self-employed free bank accounts and interest free overdrafts of £25k per business.

    Peace and good wishes :)
     
    Posted: Dec 24, 2008 By: Wild Goose Member since: Aug 15, 2008
    #2
  3. dctrpl

    dctrpl UKBF Newcomer Free Member

    Posts: 127 Likes: 1
    Thanks for replying Goose - I can get my VAT return done now.

    I hope your goose doesn't get cooked tomorrow - stick to turkey or go veggie!
     
    Posted: Dec 24, 2008 By: dctrpl Member since: Dec 9, 2007
    #3
  4. Jaydee

    Jaydee UKBF Enthusiast Free Member

    Posts: 975 Likes: 249
    ...unless you bank with Lloyds - who bizarrely do charge VAT as they dress their bank charge up as a management fee and so send an annual VAT invoice - presumably because it helps them recover more input VAT as they are improving their partial exemption calculation.
     
    Posted: Dec 24, 2008 By: Jaydee Member since: May 27, 2007
    #4
  5. Wild Goose

    Wild Goose UKBF Newcomer Free Member

    Posts: 1,340 Likes: 413
    Hmmm I have clients who bank with Lloyds and haven't come across this. What a bizarre bunch Lloyds TSB are - their small business managers don't understand a balance sheet and struggle to grasp the bank's own (very basic) cash-flow forecast software.

    Anyway, I'd treat charges as exempt unless and until just such an annual VAT statement arrives.
     
    Posted: Dec 26, 2008 By: Wild Goose Member since: Aug 15, 2008
    #5
  6. David Griffiths

    David Griffiths UKBF Legend Full Member - Verified Business

    Posts: 11,438 Likes: 3,566
    Lloyds used to have a scheme whereby they'd take a monthly sum off you at various levels, and provide "business development advice", including regular visits from a manager. Well, one visit anyway. I had a few clients on it, but they realised the value of the proposition and stopped. That was a VATable service, but simple banking services are exempt.
     
    Posted: Dec 27, 2008 By: David Griffiths Member since: Jun 21, 2008
    #6