Claiming VAT

Claiming VAT

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One of my client (Limited company) bought goods in the UK (mainly high street shops) then ship it to non EU countries.

She bought handbags, watch and cloths from various high street shops and wants to claim VAT back, my question is:

  1. Can she claim it back if there is no company name shown on the invoice, no VAT breakdown on the invoice?
  2. Some of the invoices have company name but no company address shown, no VAT breakdown on the invoice?
  3. Some of the invoice only show the director's name but have a VAT breakdown on the invoice.

All of them are for amount over £250 and have been paid by company's credit card.

(PS this is their first VAT return,I know HMRC will request an insight of invoices if I submit a refund VAT return)

Thank you for any advice.

Replies (5)

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By justwait
22nd Apr 2013 13:47

A little concerned

This post worries me a little as a small business owner (not in the profession) that you have clients but don't seem to know what seems a simple vat matter.

To reclaim VAT you must have a valid VAT invoice, HMRC guidance as to what a VAT invoice contains is here.

http://www.hmrc.gov.uk/vat/managing/charging/vat-invoices.htm#10

It would appear that in all cases an invoice should have the sellers trading name and address and their VAT registration number on.

What makes you believe that a refund return for the first return will result in questions from the VAT office, surely most newly set up companies end up with refund returns due to start up purchases?

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By Roland195
22nd Apr 2013 14:31

How does this make money?

I would be interested to know exactly how buying such items off the shelf from retail outlets in the UK can be sold at a profit to Non-EU countries?

In answer to your question, your client has to persuade the shops involved to give her a full VAT invoice which will be easier said than done. I would doubt any of the hightstreet chains would do anything other than refer you to their head office.  

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By mrme89
22nd Apr 2013 14:42

Come off it

If your client had bought a printer for £120 inc vat from say Tesco and only produced you with a receipt you wouldn’t claim the vat back?  

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Replying to Ruddles:
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By Roland195
22nd Apr 2013 14:48

No, not in that case

mrme89 wrote:

If your client had bought a printer for £120 inc vat from say Tesco and only produced you with a receipt you wouldn’t claim the vat back?  

But £120 is under the £250 limit for simplified VAT receipts.

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By Malcolm McFarlin
22nd Apr 2013 15:45

The real issue

This appears to be a variation on the Apple i-phone MTIC 'fraud' /input tax claim which is doing the rounds at the moment. In simple terms a company employs an individual or a number of individuals to buy Apple i-phones and then tries to re-claim the VAT on the purchases. The goods are then sold in bulk to a company outside the EU and the company zero rates the supply, thereby re-claiming the input tax from HMRC.  HMRC's concern is that once the goods are in the EU in bulk, then an MTIC type fraud may occur.

HMRC are critically looking at all such claims where large volumes of goods are purchased from retailers to consolidate and sell on. HMRC has already identified certain common VAT errors made by those businesses when applying the reverse charge procedure [for i-phones] and accounting for and evidencing a claim to input tax deduction.

For purchases where the total VAT exceeds £250.00 you must have a full VAT invoice in order to claim input tax. Where you do not hold a valid VAT invoice to support a claim to input tax you may be able to claim input tax subject to HMRC discretion which is set out in Revenue & Customs Brief 83/09. HMRC may exercise its discretion where alternative evidence is produced to satisfy the Commissioners that a taxable supply for a consideration has taken place and that the supply was made to you as the relevant VAT registered entity.

It is likely that HMRC will conduct an extended verification of a claim to input tax tax which can take over 12 months as they request more and more information. I am aware that a number of these cases are waiting to be heard in the Tax Tribunal where HMRC have not exercised their discretion in allowing the claim to input tax.

Yuan is correct in assuming that HMRC will want to undertake a verification visit.

Malcolm McFarlin

www.mandrtaxadvisers.com

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