VAT return

[pippilongstockings]

Hi all,

Just working through my first VAT return and have hit a problem. When I'm calculating VAT should I be calculating it for the amount I've invoiced for the period or the amount of income that has actually come in over the same period?

Thanks,
Pippi

 

[Zeno]

Depends which scheme you are using - invoice or cash accounting.

What is it you do? - what kind of business?

 

[pippilongstockings]

I think it's invoice? We don't deal in cash at all but not sure what the two different accounting types actually are?

We're a medical communications company.

 

[Zeno]

Cash accounting simply means you account for your input & output VAT on the cash actually received & paid. (Does not have to be actual cash as in used notes).

Invoice basis is where you account on invoices raised and received.

Have a wee read at the HMRC site:-
http://www.hmrc.gov.uk/vat/index.htm

 

[pippilongstockings]

Thanks Zeno, will have a read

 

[MyAccountantOnline]

Just a thought if you are using some accounting software for record keeping do make sure, if necessary, it's set to either cash or invoice accounting.

You may also want to consider the flat rate scheme.

 

[pippilongstockings]

Apparently we're using the cash accounting scheme!

Thanks nicola - we don't use any accounting software at the moment but will probably look into this in the next couple of months, any recommendations? We're on the flat rate scheme which is great!

While you're here can I ask a quick question? We are quite often asked to work at conferences abroad and usually pay for our accomodation/food etc and charge it back to the client when we invoice for the work. Up until now we haven't been charging our clients VAT on these expenses but apparently we have to pay VAT when we are paid the expenses back? That could leave us seriously out of pocket if we do frequent trips or long duration trips. Should we be charging our clients VAT on these expenses?

Thanks for your help,
Pippi

 

[elaine@cheapaccounting]

For flat rate remember to calculate the % on the gross value.

If first year you get 1% discount.

Any costs charged to a client have to have vat added to them unless they are classed as disbursements which these will not be:

http://www.hmrc.gov.uk/vat/managing/charging/disbursements.htm

I am not sure I understand why you would be out of pocket.

Surely in assessing if the flat rate scheme was suitable you took into account your purchases?

Depending on the county visited there may not be vat charged anyway.

Am I missing something?

 

[pippilongstockings]

Aah I see! So we pay VAT on it AND charge the VAT to the client? That makes sense. We wouldn't be out of pocket if that was the case. I was thinking that we pay VAT on it but shouldn't charge our clients VAT on the expenses.

Thanks for the advice, VAT is so complicated!

P

 

[Zeno]

Aah I see! So we pay VAT on it AND charge the VAT to the client? That makes sense. We wouldn't be out of pocket if that was the case. I was thinking that we pay VAT on it but shouldn't charge our clients VAT on the expenses.

Thanks for the advice, VAT is so complicated!

P

I am afraid it gets even more so. If you are talking about recovering the VAT your have been charged on the expenditure incurred while abroad E.g. Food, hotels etc, you cannot do that through your UK vat return.

 

[pippilongstockings]

Oh crikey! We're on the flat rate scheme so don't claim back VAT on any of our purchases here, should we be trying to reclaim VAT from purchases abroad then?

 

[elaine@cheapaccounting]

I am afraid it gets even more so. If you are talking about recovering the VAT your have been charged on the expenditure incurred while abroad E.g. Food, hotels etc, you cannot do that through your UK vat return.

they are on flat rate anyway

 

[Zeno]

they are on flat rate anyway

Yes, I realised after posting so my head is held in shame.

 

[elaine@cheapaccounting]

Yes, I realised after posting so my head is held in shame.

tut tut - no cream bun for you

 

[Williams lester]

Oh crikey! We're on the flat rate scheme so don't claim back VAT on any of our purchases here, should we be trying to reclaim VAT from purchases abroad then?

If you are struggling with the basics of VAT at this stage, you really need to get a bookkeeper or accountant to assist you in completing the returns. A few pounds spent on professional help could save quite a bit in the long run if you are filing incorrect returns.