Member Since: 31st Jul 2008
25th Nov 2019
It's because you don't pay the VAT your customer does.
If you want to charge out £1000 of work then your invoice once VAT registered would be £1200 being £1000 of work plus £200 VAT charged.
If you were to contra out a charge from a non-VAT registered party for £1000 of their work then they'd still be sending you £200 (£1200 of your invoice less the £1000 on theirs) which is what you use to pay the VAT man.
Your bank balance after it all is unchanged.
22nd Nov 2019
And in addition to Paul's suggestion above here's the HMRC internal manual that gives explicit statements about amounts deducted through payroll:
which says for its first line "Where deductions are made from salary for goods or services provided by an employer to their employees they are liable for VAT." Which should cover what you need.
21st Nov 2019
I suspect Which is probably right, but really you need to answer Bobbo's question.
Why are the other party paying did they just feel like throwing some money at you in which case why link it to this review/trip. If not then presumably they get something out of giving you the money, and it's that 'whatever' they get out of it that you need to define and which will decide the VAT liability, if any.
Whether train fares have VAT on or not isn't really relevant, it's what you've done for them to get this money that matters, and you're not a train operator and I assume aren't acting as an agent for them to actually take a train trip themselves so there's no real possibility you've provided a train ride to them.
21st Nov 2019
If you were informed this over 8 years ago then depending on how the formalities of the payment were structured then whoever told you may have been right at that point.
However for the last 8 years they wouldn't have been right, salary sacrifice arrangements were 'clarified' back in 2012 so that unless the benefit is exempt in its own right VAT will be due.
If it wasn't a contractual salary sacrifice but a simple payroll deduction then they will have always been wrong as VAT has always been due on those (where the supply itself has a taxable nature).
12th Nov 2019
If you were building your own house then you'd largely be right, but as a company presumably building new build houses for other people then just listen to 'The Dullard'. (Although you may want to add: fitted furniture excluding kitchen units, and carpets to the list as they are also not recoverable).
However since your post implies that your employer has already started trading you may want to listen to the voice that says "why am I working for a company that deals in multi thousand pound transactions which doesn't seem to have verified or taken advice on the proper VAT treatment of its transactions, I wonder if its done the same in other areas of its business?"
12th Nov 2019
Yes I've always viewed it as a 'fudge' where HMRC have just picked and chosen what to apply because everyone would view restricting garages from recovering on essential road safety measures as a reason for uproar, but they couldn't be bothered to legislate or find a solution that fitted in with existing practice!
They've always tended to justify by accepting that none of the expenditure is directly attributable to the MOT costs but that it all has a duality of purpose as the MOT side is there to generate repairs sales etc.
12th Nov 2019
HMRC have always taken the view that although the income for MOT's (where done at cost/ standard charge) is Outside the Scope of VAT the expenditure isn't non-business.
So as it's neither exempt nor non-business there's no apportionment needed, as these (apart from things in special orders like white goods/cars) are the only ways you need to apportion expenses.
11th Nov 2019
It registers whenever it's required to. If the deregistration was properly done, which your question indicates it was if they were trading below the threshold or even if they only had good grounds for believing it, then they just reregister when they need to. The registration would have effect from the same date that any other registration would if they hadn't been registered before.
Unless the dereg was based upon a total fantasy then HMRC have accepted the ability to dereg and they can't now reverse that decision so the interim period should be safe.
8th Nov 2019
DJKL's response tells you what you should consider when looking at agreeing the basis or expenses/recharges when entering into an agreement. And for that situation is spot on if they can recover then there's no real reason they shouldn't charge net and then add the VAT on as part of their VAT charge so they're not out of pocket.
However what I'd say here is this looks to be an engagement already in place so the above may not be what you need to consider here.
What you'll need to look at is the contract that has been agreed, if it says they can recharge expenses at gross plus VAT then you've agreed to giving them a 20% profit on their expenses. If it says expenses net of VAT then that's fine and no ones out of pocket or profiting on this. If it doesn't cover it then you need to argue it out with them and everyone needs to be a bit more careful with their documentation.
Basically the invoice should be whatever the contract that's been agreed says it should be.
28th Oct 2019
In theory there may be a liability to notify as they've exceeded the threshold, however I'd probably need to check the exact wording of the law as to when the term person is used. If the taxable person especially if it's only a legal person (partnership, ltd) has ceased to exist by the time registrtion is due then the liability to notify might have ceased with it.
In any case I'd say it's really only a theory as HMRC can't actually make an entry in the register as this isn't a liable/no longer liable case, and it's not a case of registering for a day or anything like this. If they cease before their effective date of registration then they're not liable or able to be registered, and t.b.h I'd probably just ignore it, if you're happy you've got the evidence needed to prove it should HMRC ask as a result of a direct tax query, or a look at the accounts.