VAT Return Question (That I think many would love to know!)

[tracycat]

Hey guys, I think a few folk get puzzled (especially me) when making past claims for goods/services on the first VAT return. I think an answer to this question might help a few out.

It relates to boxes 6 and 7 on the return.

6 Total value of sales and all other outputs excluding any VAT. Include your box 8 figure (Box 6)

7 Total value of purchases and all other inputs excluding any VAT. Include your box 9 figure (Box 7)

For you guys in the know, should boxes 6 and 7 include sales / purchase information which arise from any backdated claims, or only information relating from the 3 month period of the return?

Here is what I did (which is probably wrong.)

1) For box 6 I included output VAT for sales not just in the period of the return, but also for a period of 6 months before. But am I right in thinking it should only have included Sales information from the actual dates of the return. (I basically confused the 6 months you could back claim on Services with the notion that it meant I would owe HMRC vat on outputs for sales made 6 months prior to the date of our first return.) I assume that's wrong?

2) For Box 7, because I had a big backdated figure for box 5, (where you place the amount you are claiming back on purchases)I had assumed then that for box 7 I should have placed the 'total value' of purchases made since the date of the first purchase I was back claiming. This means I put a figure here of some... 4 years of purchases into this box. Would that be correct?

Everyone has been totally amazing on this forum and I know I'm asking a lot, hopefully though I think others might benefit from this info too.

 

[Scalloway]

1. You owe HMRC VAT on sales you have made from your date of registration.

2. Yes you put the total value of purchases you are claiming VAT on here. I believe HMRC as a rule of thumb check that the VAT reclaimed is 20% or less of the declared amount of purchases.

If you are reclaiming a lot of VAT expect HMRC to get in touch to have sight of the invoices you are claiming on.

 

[tracycat]

Thanks for answering Scalloway and funny you should say that Scalloway (just received a phone call about compliance after first return.) We never received a letter and there asking to see a spreadsheet of purchases (with an intention to double check some invoices / receipts.)

I claimed a total VAT of about 8k, from 60k worth of purchases over a few years but most of our sales were VAT exempted, (consisting of royalties paid to us from a company that would already collect and deduct VAT) so from 4k sales we only had a output vat of about 300 from some other bits and bops. It probably looked weird to them - who knows.

I'm probably being a complete dunce here, but it was difficult to find that information (I mean only you've provided a straight answer here) even after speaking to an hmrc person on web help - they weren't that specific.

In fact basically... you're great Scalloway. Maybe it would be useful for folks to know how the compliance goes - as that can be a bit scary for a lot of folks (hopefully not scary for me.)

 

[STDFR33]

Sounds like you need an accountant to go through everything with you.

You say your sales are exempt, if that's the case you should not have registered for VAT anyway. Perhaps there's other information missing, or you are mistaken, however.

 

[tracycat]

Gosh I didn't mean all sales (perhaps wrong choice of word?)

We voluntarily registered for VAT so we could claim on past purchases. Then we added VAT onto products which we sell (as you would do) to customers and businesses.

The 'sales' which is perhaps the wrong terminology here that I called VAT exempt is a mis- characterization. I was referring to a proportion of our income, which are Royalties that we receive from digital sales sold through an international corporation that already charges and collects VAT for said sales. (So minus the VAT they deduct and their split, we get a proportion of what is left of the income.

Clearly we're not going to pay VAT twice on the income that we receive when VAT is already deducted, however the income we DO receive... I did add to box 6 on the return, along with the sales of products that we do charge VAT on.

So let me ask you I assumed box 6 was for all income, whether that be income derived from the sale of goods/services in which we did charge VAT, and any income derived without VAT charged by us.