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Original poster

Any accountants? Question about claiming back VAT

30 replies

humptynumpty · 20/02/2010 21:26

We are recently VAT registered, trying to get my head around the whole thing.
Question is: If a buy a printer (for example) in tesco for business use and get a till receipt, is this enough to claim back the VAT. The till receipt shows the tesco name and address and VAT number but the VAT is not itemised separately. Can I work out the VAT and claim it back myself or should I have asked for a special receipt?
Hope that makes sense.
I mean if printer cost £100, I would calculate VAT is £17.50 and claim £17.50 back???
Any help gratefully received.

OP posts:

hf128219 · 20/02/2010 21:30

A Tesco receipt would suffice. I presume you mean £100 was the gross price (as in including VAT) - if so to work out the VAT the fraction is 7/47. So the VAT would be £14.89, not £17.50.

hf128219 · 20/02/2010 21:30

A Tesco receipt would suffice. I presume you mean £100 was the gross price (as in including VAT) - if so to work out the VAT the fraction is 7/47. So the VAT would be £14.89, not £17.50.

Original poster

humptynumpty · 20/02/2010 21:33

thanks hf1282219
Sorry to be dumb, i thought vat was 17.5% so would be £17.50
Can you explain the 7/47 thing please again!

OP posts:

hf128219 · 20/02/2010 21:41

You get your gross price and you times it by 7 and divide by 47.

So you buy a kettle for your office kitchen and it cost you £25 at Argos - the VAT would be £25 X 7 divided by 47 = £3.72.

When VAT was at 15% (up until 31/12/09 the fraction was 3/23.

You can also claim back VAT on any goods (eg a telephone or a van) and services (eg electricity) bought prior to your VAT registration.

For 'goods' it will be up to 3 years prior registration and 'services' 6 months prior registration.

Original poster

humptynumpty · 20/02/2010 21:51

hf128219 what a freaking nightmare!! My head is hurting now!!
So if I sell a cup of tea for £1 then the VAT would be £0.15 to be given to HMRC (rounded to the nearest penny) and the other £0.85 would be for me? Is that right?
OMG thank god I started all this, I would have been short changing myself!!!

OP posts:

NormaSnorks · 20/02/2010 21:58

humpty - I've always found the 7/47 thing confusing too!

Another way of looking at it is:

The £100 includes two 'pieces' - the 'net' price and the 'VAT'

so to get the net price, you have to take away the VAT.
I do this by dividing by 1.175 (e.g. 100/1.175 = 85.11)

Then multiple by 0.175 to find out the VAT element (= £14.89)

And check that the two together add up to the total (i.e.100 in this case)
HTH

Original poster

humptynumpty · 20/02/2010 22:01

Hi norma, thank god someone else is confused!! Obviously not as good at maths as i thought!!

OP posts:

NormaSnorks · 20/02/2010 22:04

humpty

www.vatcalculator.org.uk

('Input' is the total amount, and you have to know if that includes VAT or not)

mranchovy · 20/02/2010 23:57

I have a couple of things to add to the advice here:

If the item is over £250, you should ask for a 'VAT invoice'. This should show the name and address of your business, and will show the VAT separately. In Tesco they will do this for you at the customer service counter after you have paid at the till.

You need to calculate the VAT on your outputs in an approved way. If you are selling cups of tea, are you a cafe? Do you know if you are making any zero rated supplies (cold food and drinks to take away for example)?

Finally, are you sure you have to/want to be registered? Did you turn over more than £68,000 last year? If not, and you are a cafe, you would probably be better off not registering until you have to.

Please note that what I have said here is for information only and does not constitute professional advice.

hf128219 · 21/02/2010 08:32

Drinks to take away are not zero-rated!

Original poster

humptynumpty · 21/02/2010 08:37

mranchovy have registered as have crossed threshold, so no choice sadly.
I have got to grips with the zero rated stuff etc... All food and drink served in a cafe to eat in has VAT. All hot food and drinks to take out has VAT. Cold food and drinks to take away has zero VAT.
There are further grey areas, which I have queried direct with VAT office regarding cakes and bakery products take away.
Tis a nightmare.
Thought I had my head around it, but the 7/47 thing threw me!
Thanks for all the explanations all!!

OP posts:

hf128219 · 21/02/2010 08:40

Cold drinks to take away have VAT. Just the same as you buy a can of coke or a bottle of water in the supermarket - they are standard rated products.

foxinsocks · 21/02/2010 08:47

humpty, if you've crossed the VAT threshold then you're obviously doing quite well and I would suggest you get a bookkeeper who can help you with this sort of thing. It doesn't have to be full time - you can get people who will take your receipts once a month and draw up accounts/books/returns for you. You might feel you can't justify the cost yet but keep it in mind as it will save you time too.

business link is extremely good on advice and has links to helplines and other websites

The tax help links at the bottom are useful for people new to all the regulations etc.!

Original poster

humptynumpty · 21/02/2010 08:48

GAH, thought I had it!
Thanks hf1282219 why is it all so complicated????
Would you recommend getting an accountant to sort it all out for me? Am on a tight budget so was hoping once had my head around it, could sort it out myself?

OP posts:

hf128219 · 21/02/2010 10:41

I would view it as not necessary to get an accountant - waste of money. One you get the vat liabilities of all your products right you'll be fine.

Have you thought about using the Flat rate scheme?

Original poster

humptynumpty · 21/02/2010 13:45

thanks hf128219. At the moment we are not trading, it is a seasonal business and not open till May, so lots of time to get organised. Just sorting out reclaiming VAT from pre-registration.
Once we have decided on a product range etc.. will ask for details about flat rate schemes etc.. VAT office has sent me info and told me to get in touch when i had a minute to read them.
thanks for all your help!

OP posts:

mranchovy · 21/02/2010 15:21

Sorry, tried to pull an example from the top of my head to illustrate the point but picked the wrong one.

Just to illustrate further how detailed this can be, cold milk and milk based drinks to take away are zero rated, but most other drinks are as hf says standard rated.

humpty you have done the right thing by talking to HMRC about this, I hope they have pointed you in the direction of booklet 709/1 which gives all the detail. With this booklet to refer to, and HMRC to talk to you should be able to work through it without paying an accountant - there is no special skills or training an accountant can bring to this, it is just a matter of working through the regulations (although one who works a lot with similar businesses may be able to work through this more quickly).

Having said all of that, you should look at the flat rate scheme. The rate for caterers (10.5%) seems to be quite favourable as most of your costs are probably either staff or zero rated food supplies.

mranchovy · 21/02/2010 15:23

Sorry, cross-posted (I wrote it then went and made lunch and only just hit post!)

Original poster

humptynumpty · 21/02/2010 15:29

no don't be sorry mranchovy, i have looked over the stuff briefly, but will look into flat rate for caterers. Seems frustrating as most of our expenses are zero rated - food, but we have to charge VAT on pretty much everything we sell...

OP posts:

hf128219 · 21/02/2010 15:30

Ah, yes milk based drinks.

Oh the joys of VAT!

Also remember you could be making 'mixed supplies' to take away eg a cup of tea and a biscuit or burger, chips and a milkshake.

One other thing is that if you decide to add an optional service charge (and it is made clear it is optional on the menu) those service charges are outside the scope of VAT and are treated the same way as tips.

hf128219 · 21/02/2010 15:30

Ah, yes milk based drinks.

Oh the joys of VAT!

Also remember you could be making 'mixed supplies' to take away eg a cup of tea and a biscuit or burger, chips and a milkshake.

WestMidsAccounts · 21/02/2010 15:35

Can I have a at an Accountant being a waste of money. It might actually be a good investment to get an Accountant involved initially. They can give guidance and make sure that you are set up in the correct way. Once the modus operandi is established, then you can take over and do it yourself but if you start wrongly then you can make some expensive mistakes.

Original poster

humptynumpty · 21/02/2010 15:41

westmids appreciate your comments.
Will have a go at trying to get my head around it. The VAT office themselves have been very helpful. I think once I get myself set up it will be quite straightforward.
As the rest of you have said, what has VAT and what doesn't seems to be a total minefield... a plain biscuit versus a chocolate covered biscuit etc... What a headache!!

OP posts:

hf128219 · 21/02/2010 15:45

I meant it would be a waste of money if all the guidance is available from HMRC. You can phone their help desk for advice - or even ask for a written ruling. Either way that advice is logged.

If the wrong advice is given you have then been 'misdirected' and HMRC have no comeback.

mranchovy · 21/02/2010 17:13

Not always true hf, for instance HMRC are not going to advise you whether you would make more profit using the fixed profit scheme whereas a good accountant should.

But paying an accountant to go through everything you sell and match it up with the zero rating regs is IMHO a waste of money because you can just as easily do it yourself, and if that gives you an understanding of how it works that will be a good thing because in retail catering, almost uniquely, VAT is likely to be one of your top three expenses (along with staff and purchases).

I say this as an accountant .

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