VAT for Cafe

[ToniWS6692]

Hi everyone,

My husband and I have just bought a cafe.

Our accounts we will do ourselves. Can anyone help me understand how our VAT will work?

We will be over the £85k so will be VAT registered.
VAT annual accounting scheme we will pay every 3 months.

However, with it being a cafe - do we work out VAT for every sale (aside from zero rated) every 4 months? Or do we do a calculation for our expected gross sales for the year and pay a % of said amount?

We pay VAT on packaging/wholesalers but obviously not on meat/veg and certain other items.

And should we need to do a VAT Return - do we then add up all the VAT we have paid from supliers and take this off the VAT we have charged to customers - is this our VAT return (if we have paid more out, than received? I highly doubt we will have much, if any of a return - if anything we will be owing HMRC.

I hope this makes sense!

Thanks

 

[tertius]

Please do get on board with an accountant even if only for the annual returns. It will cost some money but gives you more peace of mind knowing that you haven't inadvertently missed something. Also many accountants have a kind of insurance policy which cover the cost of them helping you out if you ever get investigated by HMRC

 

[Scalloway]

do we work out VAT for every sale (aside from zero rated) every 4 months? Or do we do a calculation for our expected gross sales for the year and pay a % of said amount?

You can do either, your accountant will be able to advise what is most beneficial. VAT returns are done every 3 months.

 

[WaveJumper]

Its unfortunate you never engaged the services of an account before purchase but as above I would defiantly suggest you needed one now before you get yourself tied up in all sorts of knots.

 

[ToniWS6692]

You can do either, your accountant will be able to advise what is most beneficial. VAT returns are done every 3 months.

Is there a specific % I would pay ?

 

[ToniWS6692]

Its unfortunate you never engaged the services of an account before purchase but as above I would defiantly suggest you needed one now before you get yourself tied up

There was never any accounts filled - I think this is the reason the cafe was no longer a buisness.

 

[Gyumri]

Have a look here - it seems fairly straight forward. the quarterly vat returns can easily be submitted yourself.

You can use something like Vatbridge100 which is free and easy peasy.

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I'll have two sugars please.

 

[kulture]

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I strongly endorse those above who tell you to get an accountant. A good accountant may be able to save you more than you pay. Especially when you have limited knowledge.

Have you actually registered for
VAT yet? You must register.

There may be VAT schemes which might suit you, where you just pay a percentage of your gross and not claim VAT back from your suppliers. Alternatively you have to account for the VAT on every sale and add it up for the period and deduct the VAT from every supply.

There is also the additional complication of your purchase of the cafe. Were you charged VAT on the purchase? Did you buy the stock? Was there any VAT on that?

Get an accountant. Work with them to establish what you need to do, what records you need to keep, and spend more time running the business rather than stumbling on tax returns.

 

[ToniWS6692]

---

I strongly endorse those above who tell you to get an accountant. A good accountant may be able to save you more than you pay. Especially when you have limited knowledge.

Have you actually registered for
VAT yet? You must register.

There may be VAT schemes which might suit you, where you just pay a percentage of your gross and not claim VAT back from your suppliers. Alternatively you have to account for the VAT on every sale and add it up for the period and deduct the VAT from every supply.

There is also the additional complication of your purchase of the cafe. Were you charged VAT on the purchase? Did you buy the stock? Was there any VAT on that?

Get an accountant. Work with them to establish what you need to do, what records you need to keep, and spend more time running the business rather than stumbling on tax returns.

Ive looked into the schemes, the one on which we would pay VAT on % of gross sales we would go over the threshold so I think that rules that one out.

Its just the calculation on really - do we go through every sale and the VAT weve charged - do we then work out what VAT weve paid from suppliers?
Example - hot food eat in at 20% - do we then say weve paid VAT on certain items in that sale and work out what VAT weve paid from suppliers? For everything in that 4 month period?

 

[Scalloway]

Its just the calculation on really - do we go through every sale and the VAT weve charged - do we then work out what VAT weve paid from suppliers?

Your bookeeping system should be set up so that the figures just fall out at the end of the period for your VAT Return. You will need to use a computerised system to comply with the rules for filing VAT Returns online known as MTD (Making Tax Digital). Your accountant will help you set this up.

that 4 month period

VAT works on 3 month periods.

 

[Gyumri]

There's not much to work out. You sell £100 worth of eat in meals per day including beverages and so your net sales on hot food are £83.66 and your output vat is £16.34. Your take away food presumably is marked differently on your till receipts as it doesn't attract vat? Check it out and if correct and you sell £50 worth of vat exempt food then your gross sales are £150. Net sales are £150 less £16.34 output vat. You pay that to hmrc less your input vat that your suppliers charge. Returns should be filed every quarter not ever four months.

 

[pentel]

In layman's terms:

It is really important to have your sales till set up correctly to distinguish between differently rated items. At the end of the day it should generate a report showing sales at standard rate and zero rate along with the VAT taken. It is very important to differentiate the different rates for different items. Some products will have different VAT rates dependant on if they are take away or eaten on the premises. ( Greggs have different prices for these different cases).

You will then enter the daily takings onto your accounts along with the VAT taken.

When you buy items then again split the VAT out. This applies to almost everything you buy, not just the purchases that make up the sales, for example electricity, crockery, replacement equipment.

At the end of each quarter you add up all the VAT you have taken in sales, deduct all the VAT you have paid to suppliers and pay the difference to customs and excise.

It would probably be worth while using an accountant initially to make sure you are doing everything correctly including making decisions on VAT rates to apply.

 

[Paul Kelly ICHYB]

Our accounts we will do ourselves. Can anyone help me understand how our VAT will work?

This topic/post is the perfect example of why, in most cases, people should speak to an accountant.

I always tell people that a good accountant is not a cost to the business, they are an asset!

 

[kulture]

However you do it you must have an auditable trail so that you can prove the numbers. You must keep the details for years. If you get a visit from a VAT inspector then if you cannot prove the numbers they will invent their own estimates and you can bet that this will exceed yours.

An accountant can help you set up the system you need to record sales so you don’t charge VAT incorrectly.

Likewise you must not think about supplies on individual sales. If you have been charged VAT for a box of something then you add it to the VAT reclaim total box. It does not matter if you have been charged VAT or not on the ingredients of a particular sale, what matters is what you sell may incur VAT. For instance a toasted cheese sandwich, the ingredients are VAT free, but you must charge VAT to the customer.

 

[DontAsk]

Do the bookkeeping yourself but use an accountant for year end. Talk to them NOW to get their advice how to set things up. With turnover above the threshold I would expect them to save you more than they cost.

Any accounting package worth using will create the VAT return for you, and submit it electronically, as required, with just a few mouse clicks, once you set it up with the correct categories for VAT/non-VAT sales. I use VT+, for example.

 

[Newchodge]

This topic/post is the perfect example of why, in most cases, people should speak to an accountant.

I always tell people that a good accountant is not a cost to the business, they are an asset!

Or even just read the advice that has been given.

 

[Argentum Tax]

Your take away food presumably is marked differently on your till receipts as it doesn't attract vat?

Unfortunately most take-away food does incur a VAT charge. Zero rated sales at a cafe are very narrowly defined.