DO
- Recover input VAT on staff entertainment. Where non-staff members attend a staff party, you must apportion the input VAT to take these attendees into account and restrict the VAT accordingly.
- Retain records for 6 years. These could be demanded by law.
- Obtain and keep VAT invoices. HMRC are likely to refuse input VAT recovery if these are not retained.
- Charge VAT on supplies to staff.
- Account for VAT on any private use of motor vehicles. Use the fuel scale charges.
- Charge VAT on assets that you sell if you recovered input VAT when you purchased them.
- Notify your local VAT office within 30 days if major changes in your business take place.
- Charge VAT on inter-company charges (unless part of a VAT group).
- Recover VAT on the purchase of commercial vehicles used in the business.
- Claim bad debt relief if you have not been paid by a customer after 6 months.
- Recover VAT on repair and maintenance on all vehicles used in the business (special rules for leased vehicles).
- Review the special accounting schemes available to see if you are eligible to join. You can save time and money.
DON'T
- Recover input VAT unless you hold a valid VAT invoice (less detailed VAT invoices are acceptable in some circumstances eg retail invoices.
- Recover input VAT incurred on business/client entertainment. This means any hospitality including food, drink or accommodation.
- Recover VAT on goods or services used for private or non-business purposes.
- Be late in submitting or paying your VAT return or liability. This can lead to default surcharges of up to 15% of the VAT due.
- Recover VAT if you were not charged it. Certain supplies are zero-rated or exempt and therefore do not incur VAT (eg insurance, some foodstuffs).
- Make adjustments of errors on your VAT return if they total more than £10,000 (higher threshold available for businesses with turnover of more than £1m.) A voluntary disclosure must be made.
- Recover import VAT on goods purchased from outside the EU without a C79 (import VAT certificate).
- Recover input VAT which is wholly attributable to exempt supplies (unless below certain thresholds).
- Conceal errors made in your VAT accounts. This can lead to high penalties of up to 100% of the potential loss to the Revenue.
This list is not exhaustive. It has been created as a basic guide only and the VAT treatment of supplies and purchases may be affected by your specific business circumstances. Your VAT recovery position will depend on the levels of your taxable supplies and exempt supplies. Professional advice should always be sought if you are not certain about any VAT related issue.
