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Unrecoverable VAT - VAT return treatment.

All these years and I've never given a real thought to this until now...

On VAT standard-rated purchase invoices on which the VAT is not recoverable or disallowed, eg entertaining expenses, what is the correct treatment for the net and VAT items? Presumably the net, because it is standard-rated, will be included in box 7 on the VAT 100, but what about the unrecoverable or disallowed VAT? Where should that be shown, if anywhere? It isn't outside the scope of VAT because it is VAT itself. It is based on a standard-rated item but HMRC clearly states that items  entered in box 7 should not include any VAT.

If you add it to the net and show it in box 7, that is not a true figure. For years my staff have treated it as standard-rated and included it in with the net amount in box 7. Agreed, it needs adding to the net cost for accounting purposes, but how about for VAT return purposes?

HMRC website appears silent on the matter. Anyone any ideas or thoughts? Or is there a definitive answer?

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By BKD
01st May 2012 17:26

Forget about it

It appears nowhere on the VAT return

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By robguy
09th May 2013 10:14

I think BKD missed the point?

I was reading this as i have the same issue, Can anyone offer a new view? as BKD avoids answering what totals appears on VAT 100.

Currently i post as follows for a business entertainment of £60

1.  With VAT receipt = expenses A/C 60 T1 vat 0  .... total is £60 on VAT 100 box 7

2. No VAT receipt =  expenses A/C 60 T0 vat 0 ........ total is £60 on VAT 100 box 7

Thoughts....

 

 

 

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