VAT - claiming back

[MelissaDowe58]

Evening all. Just a quick one as my accountant is now on annual leave.
With regards to VAT, if I buy good I obviously claim this back.

So if I have total sales of £100,000 then in theory I owe £20.000 in VAT.

If I spent...
£200,000 on product purchases £40.000 vat claim back
£30,000 rent £6000 claim back
£50,000 other claim back £10,000

Then I now I don't owe HMRC anything?? is that right?

thanks
Mel

 

[Scalloway]

If your sales gross £100,000 then you owe £16,667 in VAT. 20% VAT is 1/6 of the gross. Redo your sums with this in mind.

You are right that if you spend more than you take in you will either owe no VAT or be due a refund.

 

[DWS]

You also need to check that you were charged VAT on all your expenses, not every purchase has VAT on it, another thing to bear in mind is that for businesses some VAT is blocked and not allowed to be reclaimed.

 

[Paul Kelly ICHYB]

YOU CANNOT CLAIM VAT BACK!

Claiming VAT is a very misleading description and makes a lot of people believe that HMRC will send a wadge of money!

You offset the VAT paid in purchases against the VAT taken in sales. In most cases, this means a payment, not a refund.

BTW, this does assume that you are registered for VAT and not on a special scheme e.g. Flat Rate

 

[japancool]

Claiming VAT is a very misleading description and makes a lot of people believe that HMRC will send a wadge of money!

They sent me a wodge of money after my first VAT return.

 

[Paul Kelly ICHYB]

Yes, and in one of my businesses, they sent me several! However, that was an exception.

The phrase 'claim' makes people thing they don't end up paying 20% or get it back all the time.

Maybe the best term to use is 'offset'?

 

[MyAccountantOnline]

Evening all. Just a quick one as my accountant is now on annual leave.
With regards to VAT, if I buy good I obviously claim this back.

So if I have total sales of £100,000 then in theory I owe £20.000 in VAT.

If I spent...
£200,000 on product purchases £40.000 vat claim back
£30,000 rent £6000 claim back
£50,000 other claim back £10,000

Then I now I don't owe HMRC anything?? is that right?

thanks
Mel

Hi Mel do you use any VAT schemes for example the VAT Flat Rate scheme?

 

[DWS]

Yes, and in one of my businesses, they sent me several! However, that was an exception.

The phrase 'claim' makes people thing they don't end up paying 20% or get it back all the time.

Maybe the best term to use is 'offset'?

Depends what business you are in, a lot of my clients work in the construction industry and ‘claim’ back Vat and get refunds on every return.
The VAT on sales is covered by the DRC.
So every return VAT is claimed back!

 

[MikeJ]

We were primarily exporters, but most of our costs were UK. We claimed back VAT almost every quarter.

In fact, we got into trouble with HMRC because we were so used to not paying VAT that one month we had an exceptional UK order and forgot that we'd need to pay VAT that quarter because of it.

 

[Socio South West]

YOU CANNOT CLAIM VAT BACK!

Claiming VAT is a very misleading description and makes a lot of people believe that HMRC will send a wadge of money!

You offset the VAT paid in purchases against the VAT taken in sales. In most cases, this means a payment, not a refund.

Tell the Agricultural industry that - Nearly all agricultural produce is zero rated, but nearly all inputs are Standard rated, The quarterly wadge from HMRC is welcome to most in those trades!

 

[DontAsk]

Yes, and in one of my businesses, they sent me several! However, that was an exception.

It happens quite regularly for me. I export a lot and a typical stock purchase will wipe out any VAT owing and give me a nice refund.

 

[kulture]

The same goes for booksellers. Indeed it is better being on monthly returns as you get the VAT refund monthly. Helps with cash flow.

The thing is if you are not selling zero rates and not exporting then a negative return is bad news, your sales are lower than your costs! Not a position to be in for long.

 

[MyAccountantOnline]

YOU CANNOT CLAIM VAT BACK!

Claiming VAT is a very misleading description and makes a lot of people believe that HMRC will send a wadge of money!

You offset the VAT paid in purchases against the VAT taken in sales. In most cases, this means a payment, not a refund.

BTW, this does assume that you are registered for VAT and not on a special scheme e.g. Flat Rate

I don't think it's misleading or incorrect to say you can't claim VAT back. It's very often exactly what most VAT registered businesses do. They may indeed be paying the net amount to HMRC, but they are still recovering (claiming back) the VAT they paid on costs.

I think the phrase can be misleading when referring to claiming tax relief on expenses - when people say they can claim back the cost of expenses that's not entirely true.