Establishing the correct VAT code(s) for two employee business entertainment claims

Establishing the correct VAT code(s) for two...

Didn't find your answer?

Hi All.

I am trying to establish the correct VAT code(s) for two employee business entertainment claims.

*****

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?

**********

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?

**********

With Thanks.

Replies (1)

Please login or register to join the discussion.

Euan's picture
By Euan MacLennan
05th Dec 2011 14:10

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.

Thanks (0)