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VAT 12.40% Query

VAT 12.40% Query

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I have a receipt to process from Costco from a client, for something called a 'Tower of Treats' and the VAT rate applied is K 12.40%.  I have never seen this before, does anyone know what the VAT rate relates to.  Many Thanks

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21st Feb 2014 12:56

The only thing I can think of is that the bottom box is normally a panettone cake, so maybe some of it is zero rated!!!! Doesn't sound quite right to me, but the first thing that came to mind 

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21st Feb 2014 12:58

This intrigued me so had a quick google and it would appear that other sites also charge at different VAT rates, so must have something to do with the treats inside the tower.  

 

http://www.spicersofhythe.co.uk/pdf/product/Spicers-Of-Hythe-Mothers-Day...

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21st Feb 2014 13:18

If you have a an idle hour...

...see http://www.hmrc.gov.uk/manuals/vfoodmanual/vfood6200.htm

Includes (iced?) gems like: "It is our policy that there is a difference between flapjacks and cereal bars. "

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21st Feb 2014 13:27

Book keeping Entries Worked Out

Thanks for your reply.

From what you have said and from looking on the HMRC website, I have now confirmed what thought, in that there is no such code, as we only have 20%, 5% an zero rated (or Exempt) in the UK.

What I will have to do,is work out what the net amount plus this VAT figure is based at 20% and the difference being the zero rated amount.  As I will have to enter it into Sage so that it shows the VAT worked out correctly.

EG:£ 64.95 plus 12.40% Vat at £8.05

Is actually £40.25 net plus £8.05 Vat at 20%, and £24.70 zero rated.

However, my understanding is that if a certain vatable element is over 30% of the whole product, then it is ok to apply VAT on the total amount.  I would have thought the majority of customers shopping there where VAT registered, so it wouldn't really affect them if they had of charged it on the whole amount.

This company has perhaps asked permission from HMRC to apply this on their receipts.  But it's pain for those processing it, as I can't set up a non existent VAT code into Sage for this.

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21st Feb 2014 13:38

Composite VAT rat

These occur quite regularly in a number of different situations but follow the same principle applied here.

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21st Feb 2014 13:39

Business expense?

It is not immediately obvious how a 'Tower of Treats' might be a legitimate business expense on which input VAT can be reclaimed.  If it is a personal expense, do not process it.  If it is business entertainment, you cannot claim input VAT, so process it gross.

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By Trevski
21st Feb 2014 14:47

No problem

Assuming you can actually reclaim any VAT on this (I take Euan's point) then I see no problem with simply entering correct net and VAT amounts in one line i.e. net £64.95, VAT £8.05 using standard VAT code (probably T1), you can overwrite the VAT amount manually. It makes no difference to the VAT return if entered all as one or is split between 20% and zero rated on separate lines

If using SAGE 2014 it may generate a warning about VAT percentage but as you know it's correct can be safely ignored.

 

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21st Feb 2014 15:24

Me being Pedantic


Thanks for your replies,

I suppose I am being pedantic, but in all the years I have done VAT returns for clients, I have never seen this before, and I deal with quite a spread of clients' businesses. 

I've learned something new.

 

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By lisler
to richard10002
21st Feb 2014 22:39

It's a mixed supply

with part of it being zero rated and part of it being standard rated. I've purchased a mixed pack of biscuits from Costco (McVites and delicious they were) the VAT rate was averaged. Biscuits are zero rated but chocolate covered biscuits are standard rated. 

I assume Costco have worked out the VAT element on the relevant portion of each and given an average to cover the VAT on the pack.

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