If registered for VAT and making supplies that are subject to either standard, reduced or zero rate VAT a business may generally claim back the VAT that it spends on business purchases. There are some exceptions, for example any VAT expenditure on entertaining your clients cannot be claimed back from HMRC. Further information on different VAT rates can be found here Value Added Tax Rates.
It is essential to have proof that the company has incurred the VAT that is being reclaimed which means that a VAT receipt must be kept as part of the company records as evidence of every VAT reclaim made.
It is also important to remember that not all expenditure will carry VAT. For example, travel costs generally do not have VAT and nor do insurance costs so there is no VAT amount that can be reclaimed for these costs even when using the standard VAT scheme.
Generally speaking, if your supplies are exempt from VAT then you will not be able to claim back the purchase VAT that your business incurs.
If a business makes a mixture of supplies that are subject to VAT and supplies that are exempt, then it is likely that it will not be able to claim back the VAT on all of the purchases that it makes. One way of simplifying this process would be to register for the Flat rate scheme. However, this is quite an involved area of VAT and further advice should be sought if you think that this applies to your business.
Why Integro Accounting?
Integro Accounting is the UK’s only specialist provider of fixed fee, limited company accountancy services for contractors, consultants and freelancers that was established to an award winning standard – our Practice Manager, Maria Hickmott FCCA, won The British Accountancy Awards’ ‘Accountant of the Year’ in 2011.
We were set up with the vision of providing a service that is the ultimate for the dynamic, busy professional of today in a language you understand.
Integro Accounting have designed a bespoke service for the contractor who is always on the go; never forgetting that one size will never fit all.
The relationship you have with your accountant is the most important factor in our service which is why we will always offer unlimited contact with your own personal accountant; whether that contact is via the phone, email or face to face.
We have our 3 offices located in London, the South-West and on the Bedfordshire and Buckinghamshire border. There are also meeting locations in many of the major cities and towns across the Home counties, South-West and South Wales, all conveniently placed so that you never have to travel far to meet your accountant.
If you have any questions about contracting or would like to find out more about how Integro Accounting can help you and business please call Christian on 01525 303984, email firstname.lastname@example.org or request a callback.