How to make sure that your business can reclaim VAT

By Jaspal Dhillon, senior manager, VAT
jaspaldhillon@lubbockfine.co.uk
02074907766

When making a VAT claim in your VAT return, your advisers will no doubt tell you that you need evidence of the cost i.e. an invoice from your supplier.

As set out in HMRC’s guidance, an invoice should contain the following information:

  • The seller’s name and address.
  • The seller’s VAT registration number.
  • An invoice number.
  • The invoice date.
  • The tax point date (i.e. the time of supply), which may be different from the invoice date.
  • Your name and address (i.e. you as the purchaser).
  • A description of the goods and/or services supplied.
  • For each description, the quantity of the goods or the extent of the services, the rate of VAT, and the amount payable excluding VAT - this can be expressed in any currency.
  • The gross total amount payable, excluding VAT - this can be expressed in any currency.
  • The total amount of VAT chargeable - this must be expressed in sterling

Therefore as a supplier, you need to ensure your invoices meet the above requirements, and as the purchaser, you should ensure you are issued with an invoice that meets the above in order to validate any VAT claimed.

However, as an example, if you needed to purchase some items from a local hardware store to give your office a bit of revamp (let’s say some standard rated items such as some new light bulbs, a tin of paint and a set of paint brushes), the invoice you receive may not necessarily contain all of the above information i.e. it will just be the normal receipt that you receive at the till.

Are you therefore unable to reclaim the VAT charged to you, because you do not have in your possession a valid VAT invoice?

The answer is that you can use the normal till receipt you would expect to get in the above example to make your VAT claim, but only in certain circumstances. HMRC allow VAT to be recovered on ‘simplified VAT receipts’, where the sale is under £250 (including VAT).

Simplified VAT receipt requirements

The following information needs to be contained on a simplified VAT receipt:

  • The seller’s name and address.
  • The seller’s VAT registration number.
  • The date of the tax point.
  • A description of the goods and/or services supplied.
  • If the sale includes items at different VAT rates then for each different VAT rate the VAT receipt must also show:
    • The total price including VAT.
    • The VAT rate applicable to the item.

In conclusion, as long as the value of the goods and/or services you receive is below £250, you can use a ‘simplified VAT receipt’ to evidence your VAT claim, as long the appropriate information set out above is contained on the receipt.

If you have any VAT related queries, as always, please do not hesitate to contact our VAT Specialist, Jas Dhillon on 0207 490 7766 or email jaspaldhillon@lubbockfine.co.uk.

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