Hi All.
I am trying to establish the correct VAT code(s) for two employee business entertainment claims.
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In the first example let's assume:
- £12 is claimed by the employee during November 2011 for four cups of coffee (£10 + VAT)
- Our business (a Limited Company) can claim input VAT (currently 20%)
I am currently posting the following entry:
1 x £12 at Zero-rated VAT
I am trying to establish whether Zero-rated VAT is correct as apposed to Exempt or Outside the Scope of VAT. I am assuming Zero-rated because VAT is charged on the amount, however, it is a disallowable expense?
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In the second example let's assume:
- £10 is claimed by the employee during November 2011 for four cups of coffee (£10 and no VAT (from a small greasy-spoon style outlet))
- Our business (a Limited Company) can claim input VAT (currently 20%)
I am currently posting the following entry:
1 x £12 at No VAT (Outside the Scope of VAT)
I am trying to establish whether Outside the Scope of VAT is correct as apposed to Exempt or Zero-rated. I am assuming so because the purchase was made from a non-VAT registered business?
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With Thanks.
Replies (1)
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Does it matter?
You need to use a "code" (would this be in Sage?) that puts no input tax into Box 4 of the VAT return, but puts the input into Box 7. Either zero-rate or exempt will presumably achieve this (but I am no expert on Sage). Outside the scope would not be right as the supplies of coffee are most definitely within the scope of UK VAT - even if the supplier is not VAT registered because his taxable supplies are less than the threshold, they are still taxable supplies.
I assume that you meant 1 x £10 in your second example.