Vat question

cainer · 7 Mar 2012 at 20:22

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

the £50k is your wages, you wouldnt pay VAT out of that, the VAT comes from the company turnover, IE: the £500k :/

arfur · 7 Mar 2012 at 20:22

What my problem is, is that vat was paid on £500k and not £50k, and as i've said its a travel company so vat is not chargeable to customers. What i'm asking is can i ask hmrc for a refund as the vat was wrong (in simple terms)

arfur · 7 Mar 2012 at 20:29

If i under paid vat i'm sure they would claw it back, therefore surely i can claim it back as it was miscalculated. Im not saying i want it all back as i was registered (foolish i know now) but it was calculated on £500k

Glaucus · 7 Mar 2012 at 20:33

You need proper advice,

http://www.hmrc.gov.uk/vat/managing/problems/corrections/correct-mistakes.htm

Claiming refunds
If you believe you've paid more VAT than you should have done, you may only make an adjustment using the methods described in this guide.
Where your net error is above the error reporting threshold and results from an over-declaration of output tax - that is, you have overstated the VAT on your supplies due to HMRC - your claim will not be paid if this would result in your 'unjust enrichment'. Unjust enrichment would happen if, for example, you passed on a mistaken VAT charge to a customer and you did not lose out as a result.
If this is the case you may be able to make arrangements to reimburse any VAT refund to your customer if your customer bore the cost of the mistaken VAT charge. However, If your customer was also registered for VAT and was able to fully deduct your VAT charge as their input tax then they did not bear the cost of the mistake.
If your claim for a repayment is turned down, you can appeal.

Jokester · 7 Mar 2012 at 20:35

If you are VAT registered and you have paid more VAT than you were required, then yes you should be able to claim the excess back.

Call your VAT office would be my advice. I suspect they might want to see your VAT accounts though to ensure they're right.

Edit: So your commission is in effect your company's service charge to the tour company?

Edit: Your companies accountant shouldn't even really know the £500k figure

Pudney · 7 Mar 2012 at 21:04

cainer said:
the £50k is your wages, you wouldnt pay VAT out of that, the VAT comes from the company turnover, IE: the £500k :/

No it's a commission. He acts as an agent on behalf of another company. That is a VATable service and not a wage.

At least from the rather sketchy information that's what I gather.

To the OP, I'm exhausting my limited knowledge of VAT. I believe it is possible to reclaim overpaid VAT but you really want to get the assistance of an accountant, and a properly qualified or experienced VAT one, as you are liable to be investigated by the revenue and there could be penalties (for not keeping proper accounting records).

Bear in mind if things go pear shaped you may have the ability to sue for professional negligence from your current accountant, but either way to HMRC it won't matter, your responsible for correct records not your accountant.

dodgem · 7 Mar 2012 at 21:14

Pudney said:
Bear in mind if things go pear shaped you may have the ability to sue for professional negligence from your current accountant, but either way to HMRC it won't matter, your responsible for correct records not your accountant.

I may be wrong on this, but I thought that if you signed over your accounts to an accountant, then the tax man is actually not allowed to contact you, but must deal with your accountant, and your accountant is responsible for your accounts (ie. the vat man won't even want to speak to you). I'm not saying this is standard, but it was certainly offered to me when i was researching accountants.

Jokester · 7 Mar 2012 at 21:16

The OP is responsible for his accounts (assuming he is the company director) not his accountant.

Jokester · 7 Mar 2012 at 21:19

Also, if you're just offering services you're probably better off getting yourself VAT registered and then also registering for flat rate VAT.

mattyg · 7 Mar 2012 at 22:05

Wow did you NOT issue Invoices. VAT should only be paid on Invoices raised.

VAT isn't hard or difficult. IF you keep accurate records.

Raise invoice, End of quarter pay amount of VAT raised on all Invoices for that period Minus any VAT you've paid on goods

Simples

How have you not gone under.

Youv'e received £50k but sent the VAT man £100k

Jokester · 7 Mar 2012 at 22:06

mattyg said:
Wow did you NOT issue Invoices. VAT should only be paid on Invoices raised.

The VAT man is going to ask him to bend over isn't he?

mattyg · 7 Mar 2012 at 22:10

dodgem said:
I may be wrong on this, but I thought that if you signed over your accounts to an accountant, then the tax man is actually not allowed to contact you, but must deal with your accountant, and your accountant is responsible for your accounts (ie. the vat man won't even want to speak to you). I'm not saying this is standard, but it was certainly offered to me when i was researching accountants.

Depends. Most accountants only file records and details that you provide. All based on information that YOU provide.

A big get out clause for them.

Unless you qualify for audit

mattyg · 7 Mar 2012 at 22:10

Jokester said:
The VAT man is going to ask him to bend over isn't he?

Looks like he offered to bend over and the VAT man just slipped in

arfur · 7 Mar 2012 at 23:18

@mattyg - I dont know if I should be offended or flattered that your imaging me "bending over"... however for everyone elses benefit...

A travel agent sells a holiday, they charge the customer and the money goes into the big corp bank account (not the travel agents who is just a reseller). 12 weeks before the holiday is due commission is paid by the corp to the travel agent for the holiday, this is where the accountant has done it wrong, they were "paid" to do a job, they did it wrong. What I need to do is try and recover the overpaid amounts.

According to the website you can go back 4 years but it doesnt state if you still have to be registered to get it.

P.S. just for reference the amounts are made up but I wanted to illustrate the difference in "turnover" (the corp) and "commission" (what I actually get).

mattyg · 7 Mar 2012 at 23:24

But the accountant has got his information from somewhere.

Invoices
Receipts
thin air

You dont do VAT once a year its done every 3 months.

The accountant can only work on information that you provide. The accountant has got the larger figure from somewhere.

I dont inform my accountant that one of the businesses I contract for turn over £600million+

Surely you provided your accountant with Invoices or receipts AND business bank statements.

The information regarding the "corp" has nothing to do with your business ONLY your turnover would be needed for VAT. I dont see why your accountant has any info regarding another company

Zbornak · 7 Mar 2012 at 23:35

mattyg said:
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

Wait wait wait wait. Ignorant person coming in here.

As I work freelance, could I start a VAT registered company and claim VAT on my expenses? Even if I earn below the £73k threshold.

[TW]Fox · 7 Mar 2012 at 23:44

dnc316 said:
As I work freelance, could I start a VAT registered company and claim VAT on my expenses? Even if I earn below the £73k threshold.

Yes you can but you will also need to charge VAT on all the work you do.

Generally speaking the benefits of being VAT registered -ie claiming VAT on expenses - are outweighed by the disadvantages - ie having to increase all your prices by 20% - when you are a low turnover one-man-band.

SpeedFreak · 8 Mar 2012 at 00:00

Are you definitely VAT registered?

Did you invoice your customers?

Did you put VAT on any invoices with your VAT registration number?

You actually need to detail this information to a VAT specialist along with a reconciliation of the input VAT you were charged in the period and the output VAT you charged to customers. The source of this information is the invoices and the date/ tax point on them.

SpeedFreak · 8 Mar 2012 at 00:02

[TW]Fox;21426060 said:
Yes you can but you will also need to charge VAT on all the work you do.

Generally speaking the benefits of being VAT registered -ie claiming VAT on expenses - are outweighed by the disadvantages - ie having to increase all your prices by 20% - when you are a low turnover one-man-band.

It does really depend on if you supply to other VAT registered (recoverable) businesses or direct to the customer/public though.

Zbornak · 8 Mar 2012 at 00:32

[TW]Fox;21426060 said:
Yes you can but you will also need to charge VAT on all the work you do.

Generally speaking the benefits of being VAT registered -ie claiming VAT on expenses - are outweighed by the disadvantages - ie having to increase all your prices by 20% - when you are a low turnover one-man-band.

Can I lower my prices to accomodate my now incured VAT? E.g. if I charge £100 a day and then become VAT registered, I could change my prices to £83.33 a day. That way I'm only gaining from claiming VAT on my expenses.

SpeedFreak said:
It does really depend on if you supply to other VAT registered (recoverable) businesses or direct to the customer/public though.

I mainly supply services to VAT registered business. Sometimes to non-VAT registered. It's probably an 80-20 split.