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?
- Stock of photos to capatilise 275 13
- What are other accountants having for lunch? 204 6
- Where can I report and accountant for defraud 93 3
- Spousal transfer and PPR 769 33
- RTI Payroll ID 681 19
- Where has Portia gone? 3,427 90
- Rogue Accountant 3,539 57
- Assigning loan from Company to adult children 81 2
- Practice management software 1,099 21
- micro entity balance sheet query 127 4
- Associated disposals - Entrepreneur's relief 335 19
- Inheritance Tax - Gifts UK 154 1
- VAT on a private sale? 170 5
- Overseas business trip - accompanied by family 236 3
- Tax refunds for 2014/15 1,235 24
- Payroll software 187 7
- Entrepreneurs Relief Shares Received as Part of Divorce Settlement 84 1
- Thoughts on revenue recognition 601 19
- Trade Association Dinner 176 1
- RTI - duplicate employee record 597 1
- Services via intermediaries and new HMRC reporting requirements 818
- Pensions Regulator 462
- How hard is it to reduce a code? 425
- Sanzar 324
- How do you do it 315
- Digital marketing focus group 307
- Kashflow balance sheet difference 279
- new investor structure 187
- Bed & Breakfast trade via Limited Company 185
- Fit for purpose 181