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The price of a VAT concession

The price of a VAT concession

Can any users out there confirm whether this is hearsay or fact?  I've heard that hassling HMRC means they are more likely to hassle you, eg ask for a VAT concession and get a VAT inspection.

The above is being used as a reason to perpetuate or implement inefficient and expensive processes that could be subject to concessions.  Here are two current examples where a VAT concession would be helpful.

1. Personal calls on corporate mobiles.  Policy is that employees must reimburse monthly in strict application of VAT law, meaning some people pay less than £1.  A concession to allow amounts to accumulate to say £10 before making a reimbursement seems reasonable to save time of staff making the payment and staff processing the payment, not to mention bank charges for processing many small value cheques.

2. Additional charge for payment by credit card.  Our various systems do not necessarily identify the VAT rate of the principal supply, and to put this in place would be a costly IT project and the solution may still require some manual intervention.  A concession to hand over VAT on a proportion of the charges (based on auditable sample data) would avoid a costly and probably imperfect solution.

Thanks in advance for any advice.


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12th Apr 2011 10:05

VAT Concessions

In my experience, you would not necessarily invite a HMRC visit simply be asking for a concession. They are not as efficient as that!

!. There is guidance on the private use of corporate mobile phones in Notice 700, para 12A.2.2. It looks like your system falls within that guidance. On the basis that the amounts are not large, you could make a file note referring to that paragraph. Then simply account for output tax when amounts are received from employees.

2. I am a little concerned that your existing system does not necessarily identify the VAT rate of the principal supply. The treatment of credit card charges will depend on whether you are making retail sales, or B2B.

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