Getting to grips with VAT: Your questions answered

Vat Questions answered
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Last week AccountingWEB’s business editor Tom Herbert caught up with Concur’s VAT compliance director Matt Lewis and Joe Serrurier, finance director at Itelligence Business Solutions to examine a range of VAT issues affecting UK businesses.

Broadcast live to AccountingWEB readers, the panel discussion covered a range of issues, from how Brexit may affect the VAT world to the impact a new government may have on rates.

Former VAT inspector Lewis also went into detail about what HMRC are interested in, common pitfalls and risks, and how to put together a comprehensive VAT strategy, while Serrurier was able to draw on his experience to offer real-life examples of VAT pain points and solutions.

If you missed it you can watch the whole broadcast on demand by clicking on this link and registering your details.

The final part of the discussion featured a live Q&A where the panel answered viewers’ VAT queries. Unfortunately the broadcast ran out of road before all the questions were answered, so Matt Lewis (ML) and Joe Serrurier (JS) stayed behind to answer a few more...

Mark - I’ve heard different things about how long to keep a VAT receipt for - what do you do?

ML: Generally the default is six years plus current financial year. However, you can negotiate with HMRC for a shorter time. If you keep them electronically there’s no point in deleting them – it’s more hassle. If it’s held in the cloud there’s no need to keep the originals. The cost of maintaining them electronically is marginal.

Claire - Our company will be going over to using USD as our base rate, so just concerned with the conversion for the VAT back into GBP for VAT returns. Should I just set my monthly FX rate as per the HMRC rate which is set on the 23rd of each month?

ML: That’s one option. However, HMRC accept rates published by leading, recognised bodies such as the FT. The key point is that you pick a solution and stick to it. If it’s just your reporting and all your transactions are in pounds then it’s just a matter of reporting in dollars. 

JS: If you’re a UK listed company you’re going to have to report in pounds anyway. If you’re invoicing in USD but need to apply UK VAT you must show the VAT amount and conversion rate on the face of the invoice. HMRC will not take currency risk!

Joanne - What is the process for claiming VAT back when an invoice was raised at a previous VAT rate - a credit note needs to be raised and a new invoice issued?

ML: This was a big problem with the last change. If there’s a rate change the place and time of supply rules kick in. Claim back at the rate you charged on the day unless the invoice is incorrect.

JS: This was a problem when it went down to 15% - customers refused to pay.

ML: Whatever the rate change, there will be transitional rules put in place to stop people manipulating them to their advantage.

Anna Pellow - Hi Matt, do you think people outside the finance team understand how important managing VAT is?

ML: No, and it’s difficult because they need to be able to get on with their own jobs. That’s why systems have been designed to make sure they don’t have to worry about them. Finance’s job is to take away the worry.

The vast majority of people want to do the right thing by their company, so you need to give them the tools to make this as easy as possible.

Emma - Are there specific VAT software products you suggest we take a look at?

ML: For expenses and AP automation clearly Concur ;-)

For complex VAT there are systems available that can give you decision trees to work out what VAT to charge on any part of the supply chain, but it’s difficult to recommend anyone in particular. Would recommend that you do your research.

JS: Decide what you need to cover, what’s your budget. I’d add that you shouldn’t be considering a solution just for VAT – that’s just one part of the whole strategy.

This broadcast was supported by Concur. To find out more about their products visit their website.

About Tom Herbert

Tom is editor at AccountingWEB, responsible for all editorial content on the site. If you have a story that might interest us or wish to comment on the site's coverage get in touch via the site's private message function or Twitter DM (@AWebTom)

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