VAT payment

[Wanderer]

Or just get the client to foot the bill directly with the hotel....

[Vito]

I stand corrected...you're right Sockpuppet. I used to do (a) and was told to do (c) when i got a vat inspection...but (b) would be fine also.

Good spot.

[Sockpuppet]

A tip when doing Vat is to make sure you do it right on expenses. A lot of people don't charge vat on top of expenses that include vat already. For instance, if a hotel costs you £100 + £20 VAT, you should be charging your clients £120 + Vat (£144).

Lots of people get pulledbup on this on vat inspections and have to cough up the shortfall.

Sorry but that is wrong.

a) A wrong way to do it would be to charge the £120 hotel to the clients at £120. Don't add VAT on the top. The tax man will figure that this includes the vat and get you to cough up for it. Worst case scenario your back to the pre vat price - but this is the wrong way to do it. You must charge vat on the whole invoice to the client (if vat registered).

b) If I pay for a hotel. £100 + £20 vat. I can pass that charge onto the client at £100 + VAT. As its cost me £100 as I reclaimed the £20 vat.

c) Pay for hotel. £100 + £20 VAT = £120. I pass this onto the client at £120 + VAT. = £144 which is effectively £100 + VAT + VAT.

Either b) or c) are perfectly good ways of charging expenses - as long as the client signs it off you can charge it how you like (as long as you add VAT on top). Method c) will get your more money - I personally use method b) but that is just me (non flat rate). Most clients I know would send method c) back and ask for me to reclaim the VAT and re submit invoice.

I could if I really felt like it stay in a hotel for £100 + VAT and charge it to the client at £5000 + VAT. That is also acceptable as long as they authorise it and pay up.

[Vito]

A tip when doing Vat is to make sure you do it right on expenses. A lot of people don't charge vat on top of expenses that include vat already. For instance, if a hotel costs you £100 + £20 VAT, you should be charging your clients £120 + Vat (£144).

Lots of people get pulledbup on this on vat inspections and have to cough up the shortfall.

[maverick18]

And don't forget to apply for flat rate VAT, it can save you a fair bit of money!

Thanks again!

I did apply for it and the certi has arrived. I had asked for it be backdated by a couple of months to coincide with my contract start date and they've agreed to it!

[Clare@InTouch]

And don't forget to apply for flat rate VAT, it can save you a fair bit of money!

[maverick18]

All you need to do is submit the form and make the payment. HMRC trust that you've done it correctly, but may well check every few years by doing an inspection.

Great ..thanks!

[Clare@InTouch]

All you need to do is submit the form and make the payment. HMRC trust that you've done it correctly, but may well check every few years by doing an inspection.

[maverick18]

Hello All,

My VAT payment is due end of this month. Since i haven't got an accountant yet, I plan to file in the return for this quarter myself.

I have registered with HMRC website and have gone thru the pdf's explaining the VAT return form to be filled.

I am curious to know whether we have to submit any supporting documents (such as bank statemnt, invoices etc) along with the online VAT form? How would the HMRC know whether I have paid the correct VAT?

Thanks!