* If you give your customers credit (and most businesses do), it’s important to get your invoicing and customer payments systems in order. The obvious benefit is to aid cash flow and it is the first step to good credit control and fewer bad debts. Some while ago, I posted about some basic details that need [read more]
Reclaiming the VAT on bad debts written off*If a bad debt has been written off by a VAT registered business, the VAT on the original sale can be reclaimed. The debt must be older than six months and less than three years and six months. You include the VAT on the bad debt in input VAT (box 4) of your VAT return. [read more] |
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VAT on settlement discounts*For the purposes of VAT, settlement discounts are treated as a finance charge. Therefore, VAT is calculated on the net amount (after the settlement discount – regardless of whether the discount is actually taken). * |
 SAGE VAT codes*Sage uses the following codes for VAT: T0 – zero rate VAT T1 – standard rate VAT T2 – exempt (eg. stamps, insurance, aire fares, bank charges, financial services T4 – EC Sales T5 – lower rate VAT (eg. electricity, gas, women’s sanitary products) T9 – not involving VAT/outside scope of VAT (eg. suppliers that [read more] |
Outside the scope of VAT*There are some things that are completely outside the scope of VAT. These include donations to charity, personal activies outside your business, MOT testing and tolls . You do not charge or reclaim VAT on transactions that are outside the scope of VAT. * |
VAT reduced supplies*Generally, electricity and gas have a reduced VAT rate (5% at the time of writing). Children’s car seats, giving up smoking aids and sanitary products also have a reduced VAT rate. * |
VAT zero rated supplies*Some goods and services are zero rated for VAT. These include books, newspapers, childrens clothing and children’s footwear. Suppliers of zero-rated VAT goods/services can register for VAT and reclaim the VAT on purchases. * |
