VAT on tools

[Nearly]

Another stupid part of the law is, that if you send me an invoice and I never pay you! you still have to pay the vat you charged me on the invoice!! and I can claim back the vat which you charged me, and never paid!!!

You can go onto a different type of vat reclaim though, reclaiming on payment / receipt rather than on invoicing.

 

[bovine]

You're claiming back more vat than you're paying!!
Was nice knowing you.

No.

Eg
Invoice £100
VAT @ 20% £20
Total £120
5% settlement if paid in 14 days (£114).

I pay £114 but can claim the invoiced VAT back of £20.

 

[Badshot]

No.

Eg
Invoice £100
VAT @ 20% £20
Total £120
5% settlement if paid in 14 days (£114).

I pay £114 but can claim the invoiced VAT back of £20.

Somehow that doesn't seem right.
But I'm no expert.

 

[Lincsman]

Somehow that doesn't seem right.
But I'm no expert.

You dont do the Vat then, its a basic part of vat accounting, enter whats on the Invoice at the Tax point.

 

[Lazy Sod]

It's called Cash Accounting. You account for the vat on paying or receiving money, not on the issue of an invoice. A much better system.

 

[Lincsman]

It's called Cash Accounting. You account for the vat on paying or receiving money, not on the issue of an invoice. A much better system.

Only if you are invoicing and paying vat every month, get a big bill for Fert with 6 months to pay, normal accounting gets the VAT back 4 months before you pay it.

 

[opininionated]

Only if you are invoicing and paying vat every month, get a big bill for Fert with 6 months to pay, normal accounting gets the VAT back 4 months before you pay it.

Which is ok, unless when you have to pay the invoice, you've spent the VAT...
I prefer the cash accounting system, only pay / claim the amount that has actually been paid / received.

 

[TripleSix]

You can go onto a different type of vat reclaim though, reclaiming on payment / receipt rather than on invoicing.

Or the Scouser method of payment reclaim.

Let's see how cold your house is when it has no windows.

 

[Vernon]

It's called Cash Accounting. You account for the vat on paying or receiving money, not on the issue of an invoice. A much better system.

We use cash accounting for vat and you're quite right, it suits us much better. Also moved to monthly vat returns which I much prefer.

 

[Adam@Rumen]

I got the same deal

£299 total of which £49.83 VAT

 

[Fowler VF]

No.

Eg
Invoice £100
VAT @ 20% £20
Total £120
5% settlement if paid in 14 days (£114).

I pay £114 but can claim the invoiced VAT back of £20.

OK to claim that £20 VAT if that is EXACTLY what it says on the invoice. But surprising that the supplier is doing this, his 5% discount for early payment is costing him more than the £6.
Ignoring VAT he sells for £100 but reduces to £95 for prompt payment. he is happy to accept £95.

But doing it like the above, he gets the £114 from you, but because the Invoice says £20/VAT he should be remitting that to HMRC, so he is only left with £94.

What a lot of suppliers do is to invoice for the £95 they want for the goods, add VAT to that (£19) to get to £114, then add on the discount/credit charge for early payment of £6 (no VAT on credit charge) to get to the same invoice total of £120. You get the same headline discount but only get to reclaim £19 of VAT not £20. Thats why its very important to check what the actual amount of VAT is as shown on the invoice. Very easy with computer accounting systems to just hit the "Calculate Net" button when you enter the total value of a purchase invoice and enter the wrong VAT amount. That's exactly the sort of thing that HMRC love to pick you up on at inspection time! (guess how I know!!).

 

[Courier]

Another stupid part of the law is, that if you send me an invoice and I never pay you! you still have to pay the vat you charged me on the invoice!! and I can claim back the vat which you charged me, and never paid!!!

Only until bad debt relief kicks in .....

 

[Lazy Sod]

I don't care what it says on the invoice; it's not my fault if the suplier can't do the maths. I just reclaim 16.666% of the total vat inclusive price.

 

[Lincsman]

I don't care what it says on the invoice; it's not my fault if the suplier can't do the maths. I just reclaim 16.666% of the total vat inclusive price.

Thats OK, but you are wrong to do this, unless its a small amount where the analysis does not have to be shown.

 

[Lazy Sod]

I don't see why. The supplier can't choose how much vat to charge.

 

[Lincsman]

I don't see why. The supplier can't choose how much vat to charge.

No, but if say he rounds down and your accounts program rounds up you have to change YOUR entry figure to match his, OK this will only be a penny but the same applies to larger differences. He will pay to hmrc what is on his invoice, and if you claim more than that back its fraud as hmrc will obviously have lost out.

Kerosene bills can be 5% or 20% depending on amount bought, do you claim 20% for all of them?

 

[Lazy Sod]

No, the only kero I buy is for the house, which contains the office.
My entry (Farmplan Cash Manager) is split into 2, 15% set against the business and 85% put down as a private withdrawal, as advised by my accountant.
The 5% vat on the 15% business portion is reclaimed, and the vat on the private part is not.
I'm not being pedantic about the odd penny anyway. If Farmplan differs by a penny, I alter the entry, as otherwise it tells me that it doesn't add up and won't let me save it.

 

[Lincsman]

No, the only kero I buy is for the house, which contains the office.
My entry (Farmplan Cash Manager) is split into 2, 15% set against the business and 85% put down as a private withdrawal, as advised by my accountant.
The vat on the 15% is reclaimed, and the vat on the rest is not.
I'm not being pedantic about the odd penny anyway. If Farmplan differs by a penny, I alter the entry, as otherwise it tells me that it doesn't add up and won't let me save it.

I do the same with Kero, but claim 5% or 20% VAT whatever is on the Invoice