VAT questions

[Cloud16789]

Hi all,



A couple of VAT related questions if anyone would be so kind please, any help would be much appreciated



VAT Margin scheme- it seems quickbooks, zero and the like are not good at handling for this scheme, is it best just to use an excel detailed spreadsheet where each item should be written with purchase price and then sold price so the vat can be worked out on the profit? Would you still use quickbooks as well? I’ve read online HMRC prefer people who use the margin scheme to write invoices but show vat as zero percent



This brings me on to my last question, with items being sent to the customer and postage being charged, do you charge VAT on the postage? According to HMRC’s portal you don’t, especially on invoices that show zero percent vat (as above) however how would this work when reclaiming VAT on the vat return for Royal Mail?



Many thanks

 

[DontAsk]

I don't know about the margin scheme but VAT on postage follows the VAT treatment of the goods being posted. I.e., if you are sending zero rated goods you do not charge VAT on the postage.

 

[scstock]

The way have have recorded VAT Margin schemes in QuickBooks is one line with the item at the price we paid for it and no VAT applied, then another line with Sales Income for the added value which includes 20% VAT.

Haven't had a VAT inspection since I started doing this 10+ years ago though ..

 

[MyAccountantOnline]

....

VAT Margin scheme- it seems quickbooks, zero and the like are not good at handling for this scheme, is it best just to use an excel detailed spreadsheet where each item should be written with purchase price and then sold price so the vat can be worked out on the profit? Would you still use quickbooks as well? ...

Probably not QuickBooks (although to be fair I've not dealt with the Margin scheme in practice for sometime) but using good Making Tax Digital compatible software means you comply with MTD rules.

You don't say what structure your business is but you may need to comply with MTD for Income tax too.

 

[Cloud16789]

Probably not QuickBooks (although to be fair I've not dealt with the Margin scheme in practice for sometime) but using good Making Tax Digital compatible software means you comply with MTD rules.

You don't say what structure your business is but you may need to comply with MTD for Income tax too.

Thanks, it is precious metals so the margin scheme will be used on used silver, and 20% vat on new silver, and no vat on gold if over a certain fineness, if I’ve got all this correct, agreed about the making tax digital I’ve just struggled to find a system (normally used to quick books) that will work with this margin scheme, which is why I saw no option but a detailed excel sheet

Regarding the person that said not to charge vat on Royal Mail postage, this is what I thought and had seen online, however how does this work when claiming back the vat on the postage we’ve paid? Is this still possible please?

Many thanks

 

[DontAsk]

Which postal services do you use? There's no VAT on normal mail.

 

[Cloud16789]

Which postal services do you use? There's no VAT on normal mail.

Royal Mail Tracked, has VAT on it, thanks

 

[Nathanto]

Royal Mail Tracked, has VAT on it, thanks

Every day is a school day, never knew until now that Tracked is VATable.

I deal in digital services so it doesn't affect me but I can't be the only one who would have blindly assumed Royal Mail postage was VAT exempt and missed out on claiming back the VAT on Tracked stuff.

 

[Ziggy2024]

None of the mainstream softwares deal with margin scheme. You have to adjust either the return or the invoices as noted above.

There is specific software for second hand cars, I remember one called dragon a few years back. May be worth asking your industry contacts if there is something similar for your specific niche.

 

[Ziggy2024]

In terms of the specific VAT question you would have to include the postage charge in the selling price to enable you to include it on the margin invoice, otherwise my understanding would be this is a separate charge which you would charge VAT on.

You would still be able to claim VAT on the postage invoice as this is not part of the cost of the item.

 

[scstock]

Which postal services do you use? There's no VAT on normal mail.

Isn't that only the case for the Royal Mail, who are providing the original service?

A business that sells and despatches things is providing a despatch service that is subject to VAT, regardless of which provider does the actual parcel delivery.

 

[DontAsk]

Isn't that only the case for the Royal Mail, who are providing the original service?

The OP specifically states they are using Royal Mail and asks about reclaiming VAT, i.e. input VAT. I also take "mail" to be generally understood as meaning Royal Mail.

A business that sells and despatches things is providing a despatch service that is subject to VAT, regardless of which provider does the actual parcel delivery.

You seem to be talking about output VAT.

There's no input VAT on "normal mail" purchases from Royal Mail. The OP has, however, now clarified they are using a tracked service which is subject to VAT.