Vat question

arfur · 7 Mar 2012 at 18:24

Hi,

I've discovered that my vat has been incorrectly worked out by my accountant over the padt 2 years. Basically i should not have charged vat due to low turn over, is there a way that i can reclaim the vat? I've been told that i maybe able to resubmit the forms but now i'm de-vat'd.

Thanks

mattyg · 7 Mar 2012 at 18:26

You SHOULD have charged VAT as you were vat registered.

You can reclaim the VAT on any business purchases YOU'VE made.

You can be VAT registered and only turnover £1 Its just that you HAVE to be vat registered once you hit the threshold in any 12 month period

mollymoo · 7 Mar 2012 at 18:28

As far as I know if you're registered for vat then you pay it. Are you saying you shouldn't have been registered for vat because of your low turnover? And that you've de-registered too late?

arfur · 7 Mar 2012 at 18:47

Sorry let me clarify, my biz is a travel company that is part of a large corp. the turnover is 500k est but my comission was sub £50k. The 500k never touched my account but the accountant worked out vat on the 500k & not the £50k.

j0s · 7 Mar 2012 at 18:51

arfur said:
Sorry let me clarify, my biz is a travel company that is part of a large corp. the turnover is 500k est but my comission was sub £50k. The 500k never touched my account but the accountant worked out vat on the 500k & not the £50k.

You should get charged VAT on the turnover, I assume the 500k is what your company made?

arfur · 7 Mar 2012 at 18:58

Why?? Every other accountant has told me it should be on the commission as the turnover gets paid directly to head office bank and not my companys bank account

j0s · 7 Mar 2012 at 19:00

arfur said:
Why?? Every other accountant has told me it should be on the commission as the turnover gets paid directly to head office bank and not my companys bank account

Then why ask on here if every other accountant has told you otherwise, you already had your answer

arfur · 7 Mar 2012 at 19:03

No the question was can i reclaim it , the accountant wouldnt commit as i'm not his client

mattyg · 7 Mar 2012 at 19:04

If you've charged VAT and been Paid VAT then the VAT man want HIS VAT.

If your primarily B2B then being VAT registered will enable you to claim VAT back on purchases made for the business.

I'm confused on what your having issues with

Jokester · 7 Mar 2012 at 19:04

Why is your accountant working out VAT for your personal income in that case? He's right - VAT is chargeable on the companies sales.

mattyg · 7 Mar 2012 at 19:04

Reclaim what. The VAT that youve been paid??

mistercrabb · 7 Mar 2012 at 19:17

As others have said, if you charged someone VAT, then you have to pay that VAT to the tax man. I don't see what the problem is, VAT goes in one end and out the other, it only really effects the consumer (some exceptions).

Pudney · 7 Mar 2012 at 19:42

So, you earned £50k commission and paid over to the revenue £100k VAT (being lazy and just assuming constant 20%). Call me crazy but didn't you think that was a tad high?

arfur · 7 Mar 2012 at 19:49

As a new biz i trusted the accountant to sort everything, no turns out i was paying vat on £500k & not the £50k

cainer · 7 Mar 2012 at 19:51

arfur said:
Sorry let me clarify, my biz is a travel company that is part of a large corp. the turnover is 500k est but my comission was sub £50k. The 500k never touched my account but the accountant worked out vat on the 500k & not the £50k.

surely its the 'large corp' that owes the VAT? you were just a middle man earning comission

Jokester · 7 Mar 2012 at 19:51

What does your company do and who does it do it for?

weringo · 7 Mar 2012 at 20:09

Even if you're below the threshold (73k I think atm) you can still register for VAT, so as far as HMRC are concerned there's been no error with regard to your VAT registration.

Also, even if you could reclaim the VAT do you realise you'd need to pay back that VAT to all of the customers you've charged VAT to? It's the customer who pays the VAT not the business, the business is merely the middle man collecting on behalf of HMRC.

cainer · 7 Mar 2012 at 20:17

you did charge your customers VAT didnt you?

Glaucus · 7 Mar 2012 at 20:21

weringo said:
Also, even if you could reclaim the VAT do you realise you'd need to pay back that VAT to all of the customers you've charged VAT to? It's the customer who pays the VAT not the business, the business is merely the middle man collecting on behalf of HMRC.

I think and I may be wrong. That he is basically a travel sales agent. He sales holidays to people, the customers pay all money and vat to main coporation. Corporation then pays the OP a "wage".

dodgem · 7 Mar 2012 at 20:22

Presumably, if you have turned over 500k, and your business has taken 50k commission, then you have sold 50 holidays at £10k inc VAT, charged your customer £10k inc vat, and then been charged £9k inc VAT by the parent company.

You pay £2k vat per holiday sold to the tax man, and reclaim the £1.8k vat charged to you by the parent company. You make a net VAT loss of £10k over the year.

However, if the situation was that you were not handing any money, but being payed £1k comission per holiday sold (following my example figures), then you shouldn't have vat registered because you are only ever losing out.... Each time you invoice the parent company for your commission, you invoice at £1k inc vat. You wanted to not be vat registered and invoice £1k exc. vat, which is just £1k since there is no vat if you aren't vat registered.

And I'm pretty sure that you cannot retrospectively claim back the VAT from the vat man. The line will be, that you should not have registered yourself for vat. There are some cases where it is a financial bonus to register for VAT even with a low turnover, and you are not allowed to suck it and see as it were, and then change your mind if it works out to be worse for you.