Frequently asked questions about VAT filing answered by ANNA’s Tax Terrapin

Yes, you can claim back VAT on a VAT registered vehicle purchased through an auction, provided certain conditions are met.

Firstly, you must be a VAT-registered business. If you are not VAT-registered, you will not be able to reclaim the VAT.

Secondly, the vehicle must have been purchased for use in your business. If the vehicle is used for both business and private purposes, you can only reclaim the business portion of the VAT.

Thirdly, you need to have a valid VAT invoice for the vehicle. The invoice must contain certain information such as the date, the VAT amount, the supplier's VAT number, and a description of the goods or services.

Finally, you should claim the VAT on your next VAT Return. You can do this by including the VAT amount in your VAT Return form.

Please note that there are certain situations where VAT cannot be reclaimed, such as when a vehicle is imported from outside the UK and it is seriously damaged. In such cases, the VAT will not be refunded.

Source HMRC articles:

https://www.gov.uk/hmrc-internal-manuals/vat-joint-and-several-liability/jsl1300

https://www.gov.uk/importing-vehicles-into-the-uk/print

https://www.gov.uk/defer-national-insurance/print

Yes, you can claim back VAT on services incurred before the new build starts, but only for certain services and under specific conditions. According to the UK's official tax manual, the 'DIY housebuilders’ scheme' allows you to apply for a VAT refund on building materials and services if you’re building a new home.

However, you cannot get a VAT refund for professional or supervisory fees - for example, architects or surveyors, or for hiring machinery or equipment. Therefore, if the services incurred before the new build starts fall under these categories, you would not be able to claim back the VAT.

Any eligible goods bought by a house-buyer that are incorporated before the developer completes the building can be claimed for under the Refund Scheme. This includes items that substitute items already incorporated by the developer. Goods incorporated after the developer has completed the property can’t be claimed for. Remember, you can only make one claim for a VAT refund under the scheme, and you must apply to HM Revenue and Customs (HMRC) within 3 months of completing the work.

Source HMRC articles:

https://www.gov.uk/vat-building-new-home/print

https://www.gov.uk/hmrc-internal-manuals/vat-construction/vconst24450

You can claim back VAT on a new self build under the 'DIY housebuilders’ scheme'. To be eligible for this scheme, the home must be separate and self-contained, be for you or your family to live or holiday in, and not be for business purposes (although you can use one room as a work from home office). Builders working on new buildings should be zero-rated, meaning you should not pay any VAT on their services.

You can claim a VAT refund for building materials that are part of the building and cannot be removed without tools or damaging the building. However, you cannot get a VAT refund for building projects in the Channel Islands, materials or services that do not have any VAT - for example, they were zero-rated or exempt, professional or supervisory fees - for example, architects or surveyors, hiring machinery or equipment, buildings for business purposes, buildings that cannot be sold or used separately from another property because of a planning permission condition, building materials that are not permanently attached to or part of the building itself, fitted furniture, some electrical and gas appliances, carpets or garden ornaments.

To claim a VAT refund on a new build, you need to fill in form 431NB. You can only claim a VAT refund once, and you must claim within 3 months of the building work being completed. You must include the following documents as part of your application: all original invoices, a full set of building plans, either Full Planning Permission, or both the Outline Planning Permission and Approval of Reserved Matters, the Building Regulation Completion Certificate or other evidence.

Source HMRC articles:

https://www.gov.uk/vat-building-new-home/print

https://www.gov.uk/hmrc-internal-manuals/vat-construction/vconst24350

Yes, an architect can charge VAT for their services on new builds. However, there are certain conditions where the architect's services may be zero-rated for VAT. According to the UK's official tax manual, for the work to be zero-rated, it must qualify as a genuinely new, self-contained house or flat. This means:

1. It’s self-contained - there are not any internal doors or connections to other houses or flats.
2. It can be used independently of any other property, including businesses.
3. It can be sold on its own.
4. It has proper planning permission.
5. Any existing buildings on the site have been demolished completely to ground level (unless you’re extending an existing building to create a new house or flat).

If the new build does not meet these conditions, the architect must charge VAT at the standard rate of 20%. For mixed-use buildings, like a shop with a flat above it, only the work on the residential part can be zero-rated for VAT.

Source HMRC articles:

https://www.gov.uk/vat-builders/print

https://www.gov.uk/vat-building-new-home/print

Yes, even if you are not VAT registered, it is important to keep receipts for your business expenses. These receipts serve as proof of your expenses, which you may need to provide when filing your tax returns or if HM Revenue and Customs (HMRC) checks your records.

According to the VAT guide, you must keep a record of everything you buy and sell, copies of all invoices you issue, all invoices you receive (original or electronic copies), and general business records such as bank statements, cash books, cheque stubs, paying-in slips and till rolls.

It's worth noting that while you may not be required to keep VAT-specific records if you're not VAT registered, maintaining thorough financial records is a good practice for any business.

Source HMRC articles:

https://www.gov.uk/charge-reclaim-record-vat/print

https://www.gov.uk/hmrc-internal-manuals/vat-trader-records/vatrec2020

Yes, you need to register for VAT if your total VAT taxable turnover for the last 12 months was over £85,000 or you expect your turnover to go over £85,000 in the next 30 days. If your business is based outside the UK and you supply any goods or services to the UK, you must also register for VAT regardless of your VAT taxable turnover. However, if everything you sell is exempt from VAT, you do not have to register.

If you're a small business with an annual taxable turnover of £150,000 or less excluding VAT, you may be eligible for the VAT Flat Rate Scheme. If your annual VAT taxable turnover is £1.35 million or less, you may be eligible for the VAT Annual Accounting Scheme or the VAT Cash Accounting Scheme. If you are a retail business or sell second-hand goods, you may be able to use a VAT margin scheme or one of 3 VAT retail schemes.

Source HMRC article:

https://www.gov.uk/register-for-vat/print

You can claim VAT on a car in the UK under certain conditions. According to the HMRC internal manuals, you can recover the VAT when you buy a car if it:

1. Is part of the stock in trade of a motor manufacturer or dealer,
2. Is used primarily for the purposes of taxi hire; self drive hire or driving instruction,
3. Is used exclusively for a business purpose and is not made available for private use.

A qualifying car is a car on which the full input tax block has not been incurred by the current or any previous owner. Therefore, some used cars will also be qualifying if the previous owners were able to recover VAT on their purchase in full. Cars sold on by driving schools, daily rental or leasing companies are likely to be qualifying cars.

Most businesses, apart from dealers and manufacturers, will need to show exclusive business use and non-availability for private use.

Source HMRC articles:

https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit51800

https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit50100

https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit52400

Yes, you can claim for van insurance if the van is used for business purposes. It is important to inform your insurance company whether your van is for social or business use, as this will affect your policy. If the van is used solely for business purposes, you can claim the entire cost of the insurance. If it's used for both personal and business purposes, you can only claim the portion of the insurance that relates to business use.

Source HMRC articles:

https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim16383

https://www.gov.uk/guidance/driving-a-van

https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim16386

Yes, you can claim all fuel expenses, but it depends on the nature of the usage. If the fuel expense is strictly for business purposes, you can claim all of it. However, if the vehicle is used for both personal and business purposes, you need to separate the costs and only claim the business portion.

For example, if you use your car 50% for business and 50% for personal use, you can only claim 50% of your fuel costs. You can calculate the business portion based on mileage. Keep a detailed log of your business miles and total miles to support your claim.

Remember, it is important to keep all receipts as proof of the expenses you are claiming.

You must register for VAT in the UK if your VAT taxable turnover exceeds £85,000 in the last 12 months. You should register within 30 days of the end of the month when you went over the threshold. The effective date of registration is the first day of the second month after you go over the threshold.

If you realise that your total VAT taxable turnover is going to exceed the £85,000 threshold in the next 30 days, you must also register for VAT. In this case, you should register by the end of that 30-day period. The effective date of registration is the date you realised, not the date your turnover went over the threshold.

If your business only sells goods or services that are exempt from VAT or 'out of scope' but you buy goods for more than £85,000 from EU VAT-registered suppliers, you also need to register for VAT.

If you take over a VAT-registered business, you must register for VAT if the combined taxable turnover of the new business and your existing business is over the threshold.

If your taxable turnover goes over the threshold temporarily, you can apply for a registration 'exception'. You need to write to HMRC with evidence showing why you believe your VAT taxable turnover will not go over the deregistration threshold of £83,000 in the next 12 months.

Source HMRC article:

https://www.gov.uk/register-for-vat/print

If you don't pay your VAT bill, there are several consequences.

Firstly, HM Revenue and Customs (HMRC) will record a 'default' on your account if you are late with your VAT return or payment. This default can lead to you being placed in a 'surcharge period' which lasts for 12 months. If you default again within this period, the surcharge period is extended for another 12 months, and you may have to pay an extra amount (a 'surcharge') on top of the VAT you owe.

From 1 January 2023, the penalty system will change. You'll get separate penalties for submitting your return late and paying late. For each VAT Return you send late, you'll get a penalty point. Once you reach your penalty point threshold, you'll get a £200 penalty. The threshold is set by your accounting period (if you pay monthly, quarterly or annually). You'll get a further £200 penalty for each subsequent late submission while you're at the threshold.

If you make a late payment, you could get a penalty. The penalty amount goes up after 16 days, and then again after 31 days. You'll be charged late payment interest from the first day your payment is overdue, until you pay in full.

If you're having difficulty paying, you should contact HMRC as soon as possible. They may be able to help you set up a payment plan or give you more time to pay.

If your business is subject to an insolvency procedure, different rules apply. You're still responsible for your VAT if you are declared bankrupt and continue to trade or set up a voluntary arrangement to pay off your debts.

Source HMRC articles:

https://www.gov.uk/submit-vat-return/print

https://www.gov.uk/tax-on-shopping/print

Yes, whether you are VAT registered or not, you are required to pay import VAT when importing goods into the UK. However, the way you handle this VAT differs based on your VAT registration status.

If you are VAT registered, you can account for import VAT on your VAT return using postponed VAT accounting. This allows you to declare and reclaim import VAT on the same VAT return, subject to normal rules. Alternatively, you can choose to pay import VAT on importation and reclaim it later using your import VAT statement as evidence.

If you are not VAT registered, you will still have to pay import VAT, but you will not be able to reclaim it. If you are a non-UK trader and not registered for UK VAT, you can arrange for an agent in the UK to import and supply goods on your behalf. The agent’s supply of services to you will be at the standard rate of VAT which you will not be able to reclaim. The agent will be able to recover the import VAT as input tax, if they are an agent acting as principal under Section 47 of the VAT Act.

Source HMRC article:

https://www.gov.uk/guidance/vat-imports-acquisitions-and-purchases-from-abroad

In the UK, you must register for VAT if your total VAT taxable turnover for the last 12 months was over £85,000 or if you expect your turnover to go over £85,000 in the next 30 days. This is known as the VAT threshold. However, if your annual taxable turnover is £150,000 or less excluding VAT, you may be eligible for the VAT Flat Rate Scheme. If your annual VAT taxable turnover is £1.35 million or less, you may be eligible for the VAT Annual Accounting Scheme or the VAT Cash Accounting Scheme. If you are a retail business or sell second-hand goods, you may be able to use a VAT margin scheme or one of the 3 VAT retail schemes. Please note that you can choose to register for VAT voluntarily if your turnover is less than £85,000.

Source HMRC article:

https://www.gov.uk/register-for-vat/print

Yes, you have to pay VAT if your total VAT taxable turnover exceeds the threshold of £85,000 in the last 12 months. This applies even if you only went over the threshold for two months. Once you exceed the threshold, you must register for VAT within 30 days of the end of the month when you went over the threshold. Your effective date of registration is the first day of the second month after you go over the threshold. After registration, you must pay HM Revenue and Customs (HMRC) any VAT you owe from the date they register you.

If you are on the VAT Annual Accounting Scheme, you must make advance payments towards your VAT bill (either monthly or quarterly) during your accounting period and a final payment when you submit your VAT Return. If you default on your VAT payments, you may have to pay a surcharge, which is an extra amount on top of the VAT you owe. The surcharge is a percentage of the outstanding VAT for the period in default and is calculated on the due date.

Source HMRC articles:

https://www.gov.uk/register-for-vat/print

https://www.gov.uk/vat-annual-accounting-scheme/print

https://www.gov.uk/submit-vat-return/print

If your business is not VAT registered, you cannot offset the purchase of a car against your VAT as you are not in the VAT system. However, you may be able to claim the cost of the car as a capital allowance against your taxable profits, depending on the use of the car in your business.

If your business was VAT registered, you could potentially recover the VAT when you buy a car if it is part of the stock in trade of a motor manufacturer or dealer, is used primarily for the purposes of taxi hire, self-drive hire or driving instruction, or is used exclusively for a business purpose and is not made available for private use.

But since your business is not VAT registered, these conditions do not apply. It's important to note that even if your business was VAT registered, there are strict conditions for claiming VAT back on cars, and it's not usually possible to do so if the car is available for private use.

Source HMRC articles:

https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit51800

https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit52400

https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit55700

When a UK VAT registered company sells motor boats, shipped from the EU, to VAT registered Spanish companies, the transaction is treated as an intra-EU supply of goods.

Under the general rule for intra-EU supplies of goods, the supply is zero-rated in the UK, and the Spanish company accounts for VAT in Spain under the reverse charge mechanism.

The rules and procedures to be followed for the UK company to zero-rate the supply include:

1. The goods (motor boats) must be dispatched or transported from the UK to a destination in another EU member state (Spain) by the seller or on behalf of the seller.
2. The customer must be a taxable person in another EU member state (Spain) and must provide their VAT identification number to the seller. The UK seller should check the validity of the Spanish VAT number on the VIES system.
3. The UK seller must obtain and keep evidence that the goods have been removed from the UK within three months of the supply.
4. The supply must be reported on the UK seller's VAT Return and EC Sales List.

However, as the motor boats are shipped from the EU, not the UK, the situation might be more complex. The UK company might be seen as acting as an intermediary in the transaction. In this case, it's recommended to seek professional advice to ensure compliance with VAT rules in all involved jurisdictions.

The VAT Sailaway Boat Scheme mentioned in the tax guide is not applicable as it is only for non-resident individuals, not businesses.

Source HMRC articles:

https://www.gov.uk/hmrc-internal-manuals/vat-single-market/vatsm3600

https://www.gov.uk/hmrc-internal-manuals/vat-sailaway-boat-scheme/vswb1030

https://www.gov.uk/hmrc-internal-manuals/vat-sailaway-boat-scheme/vswb1020

The Value Added Tax (VAT) on Commission on Software Licences in the UK would generally be treated as a supply of services. If the commission is received for supplying software licences within the UK, it would be subject to the standard VAT rate, currently 20%.

However, if the software licences are being supplied to customers outside the UK, the place of supply rules would apply. For digital services, which include software and software licences, supplied to consumers (B2C) in the EU, the place of supply is where the consumer is based, not where the supplier is based. VAT on these services is therefore charged at the rate applicable in the consumer's country and not the UK. This is facilitated through the VAT Mini One Stop Shop (VAT MOSS) system.

It's important to note that these rules can be complex and may vary depending on the specifics of the situation, including the nature of the software, the terms of the licence agreement, and the tax residency of the individual or company receiving the commission.

Source HMRC articles:

https://www.gov.uk/government/collections/vat-moss-vat-on-sales-of-digital-services-in-the-eu

https://www.gov.uk/guidance/vat-place-of-supply-of-services-notice-741a#section8

https://www.gov.uk/guidance/register-and-use-the-vat-mini-one-stop-shop

The VAT domestic reverse charge must be used for most supplies of building and construction services, which are reported within the Construction Industry Scheme (CIS). However, it's crucial to note that the reverse charge does not apply to all services. The list of services is the same as the list of 'construction operations' covered by the CIS, except for supplies of workers provided by employment businesses.

If your professional services fall under the list of 'construction operations' covered by the CIS, you should apply the reverse charge when invoicing the subcontractor. If your services are not construction operations, the reverse charge would not apply.

It's also important to note that if the subcontractor is not VAT registered, the reverse charge cannot apply as it's a mechanism that affects how VAT registered businesses account for VAT.

Source HMRC articles:

https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services

https://www.gov.uk/hmrc-internal-manuals/vat-place-of-supply-services/vatposs14400

https://www.gov.uk/what-you-must-do-as-a-cis-contractor/print

Yes, VAT is applicable on the deposit of a new car. The VAT is calculated based on the total cost of the vehicle. In the examples provided in the tax guide, VAT is shown as a separate line item on the sales invoice and finance document. For instance, in the case of a new vehicle priced at £12,000, the VAT is £2,400, making the total cost £14,400. The customer's deposit, represented by the Part Exchange value, has increased from £800 to £3,200. However, it's important to note that the VAT treatment can vary depending on the specific circumstances of the transaction, such as whether there is any negative equity involved in the transaction.

The VAT treatment on the purchase of a company in the UK depends on whether the company is being sold as a 'going concern'. If a business is sold as a 'going concern', it means the business is operating and trading. In such cases, the sale may be outside the scope of VAT under the Transfer of a Going Concern (TOGC) rules. This means no VAT is charged on the sale.

However, certain conditions must be met for the sale to qualify as a TOGC. These include the requirement that the assets must be used by the purchaser for the same kind of business as that operated by the seller. If these conditions are not met, VAT may be due on some or all of the assets included in the sale. The consideration must be apportioned between those assets on which tax is due and the other assets, and this apportionment must be fair and reasonable.

In terms of Corporation Tax, if the purchased company has unpaid tax, HMRC can collect this from any person who controlled the company at some time during either the three years before the change of ownership of the company, or if shorter the period since a previous change of ownership, or any company which that person controlled at any time during the three years before the change of ownership.

When selling a business in the UK, the VAT implications depend on whether the business is being sold as a 'going concern'. If a business is sold as a 'going concern', the sale might be outside the scope of VAT under the Transfer of a Going Concern (TOGC) rules. This means no VAT is charged on the sale.

For the sale to qualify as a TOGC, certain conditions must be met. These include the requirement that the assets must be used by the purchaser for the same kind of business as that operated by the seller. If these conditions are not met, VAT may be due on some or all of the assets included in the sale. The consideration must be apportioned between those assets on which tax is due and the other assets, and this apportionment must be fair and reasonable.

It's important to consult with a tax professional or the HMRC guidance to ensure that the sale meets the TOGC criteria and to understand any potential VAT liabilities.

Source HMRC articles:

https://www.gov.uk/guidance/vat-transfer-of-a-going-concern

No, you cannot backdate any flat rate VAT if you have been paying the full 20% on previous returns. Once you join the Flat Rate Scheme, it only applies to future VAT returns. The scheme does not allow for retrospective application. Therefore, any VAT paid at the standard rate prior to joining the scheme cannot be adjusted to the flat rate. It's important to note that the Flat Rate Scheme is designed to simplify your records of sales and purchases. It allows you to apply a fixed flat-rate percentage to your gross turnover to arrive at the VAT due.

Source HMRC articles:

In the UK, corporation tax is paid on the profits that a company makes. If a subsidiary company makes a profit and pays corporation tax on it, and then transfers the remaining post-tax profit to a holding company, the holding company does not have to pay corporation tax again on the same profit. This is because the profit has already been taxed at the subsidiary level.

However, it's important to note that the transfer of cash from the subsidiary to the holding company must be done in a way that does not create a new taxable event. For example, if the holding company charges the subsidiary a fee for management services, this would be considered income for the holding company and would be subject to corporation tax.

As for VAT, it is typically charged on the supply of goods and services. A simple transfer of cash from one company to another, without any goods or services being supplied, would not typically attract VAT. However, if the transfer is done as a consideration for a supply of goods or services, VAT may be applicable.

Please consult with a tax professional or HMRC for advice tailored to your specific circumstances.

Yes, you can claim VAT on purchases from Google, but only if you are VAT registered and the purchases are for business purposes. Google, like many other international companies, charges VAT at the local rate. In the UK, this is currently 20%. When you make a purchase from Google for business purposes, you should receive an invoice that includes VAT. You can then claim this VAT back on your VAT return. However, it's important to note that not all purchases may be eligible for VAT reclaim. For instance, if the purchase is not strictly for business purposes, or if it's for exempt supplies, you may not be able to reclaim the VAT.

Yes, you can recover VAT on purchase invoices outside the scope of the UK under certain conditions.

If you are a business established outside the UK, you may be eligible for a refund of UK VAT charged on goods imported for business purposes, provided there is no other form of import relief available. If you have already incurred VAT on imported goods and wish to claim relief under this scheme, you should contact the Overseas Repayment Unit (ORU) for advice at newcastle.oru@hmrc.gov.uk.

To be eligible to make a claim, your business must meet the following criteria:

• Must not be registered, liable or eligible to be registered for VAT in the UK
• Must not have any place of business in the UK or in the Isle of Man
• Must not make any supplies in the UK (other than transport services related to the international carriage of goods, or where VAT is payable by the person in the UK to whom the supply is made)
• The goods must be located in Northern Ireland when they are supplied.

If you wish to claim repayment of VAT incurred in the United Kingdom, you must send your claim to the Overseas Repayment Unit (ORU). The application for refund (VAT65A) must be submitted together with a Certificate of Status (CoS) along with all VAT invoices.

Please, note that the place of supply of a service is crucial in determining the VAT treatment. If the place of supply of a service is outside the UK and EU, that supply is described as outside the scope of VAT altogether.

Source HMRC articles:

The VAT assessment for an LLP (Limited Liability Partnership) that operates in the education sector and employs tutors depends on several factors.

Firstly, the nature of the services provided by the tutors needs to be considered. If the tutors are providing education services under a contract for services and they have control over the manner and style of their delivery, the fees from these services are taxable in principle (Guide 2).

Secondly, the status of the LLP as an 'eligible body' is important. Education is exempt from VAT if it is supplied by an eligible body (Guide 3). An eligible body is a certain type of organisation that is defined under the VAT Act 1994, Schedule 9, Group 6, Item 1(a). If the LLP qualifies as an eligible body, the education services it provides would be exempt from VAT.

Lastly, if the LLP is VAT registered, it can claim VAT on its accountancy fees in full, subject to the normal rules. The only exception is where the accountant’s fees clearly relate to taxation matters that do not relate to the VAT registered business (Guide 1).

In conclusion, the VAT assessment would depend on the nature of the services provided by the tutors, the status of the LLP as an 'eligible body', and whether the LLP is VAT registered. It would be advisable to seek professional advice to ensure the correct VAT treatment.

If you deregister from VAT, you are generally deemed to have supplied the goods forming part of the business assets immediately before ceasing to be a taxable person. This means that VAT is normally payable on the goods and assets, which remain on hand at the time of deregistration. However, there are certain reliefs available that you might be eligible for.

It's also important to note that if any of the assets on hand fall within The Capital Goods Scheme, you may need to consider specific guidance on how to treat these assets at deregistration.

In summary, selling fixed assets after deregistration from VAT may still require you to account for VAT, subject to the normal registration rules and any applicable reliefs or specific schemes like The Capital Goods Scheme.

Yes, you can reclaim VAT on employee entertainment under certain conditions. According to the HMRC guidelines, VAT incurred on entertainment for staff, such as staff parties, team building exercises, staff outings, and similar events, can be recovered in full (VIT43600). However, if entertainment is provided only for directors or partners of a business, the VAT incurred is generally not considered input tax as the goods or services are not used for a business purpose. An exception to this rule is when directors or partners attend staff parties or when they incur subsistence type expenditure such as meals and accommodation while on a business trip.

In cases where employers entertain both employees and non-employees (for example, allowing employees to bring guests to staff parties without charging), the employer can only recover as input tax the VAT incurred on entertaining employees.

On the other hand, VAT on business entertainment is generally not recoverable. This includes entertainment provided by clubs and associations, free drinks given to customers at a restaurant, free wine or beer tasting events for trade customers, free meals for coach drivers at motorway service stations, and entertainment provided by local authorities at civic functions (VIT43400).

Source HMRC articles:

VAT is not charged on most aspects of passenger flights, whether domestic or international. This includes the cost of the ticket itself. According to the HMRC's interpretation of 'operating for reward on international routes' within the meaning of Article 148(f) of the EU VAT Directive, any route that is not a wholly domestic route within the UK is considered an international route and is zero-rated for VAT. As such, flights that are wholly within the UK are not zero-rated and are subject to VAT. However, airlines, including easyJet, do not typically pass this cost onto the consumer. Instead, they absorb it as part of their operating costs. Therefore, as a passenger, you would not typically see or pay VAT on your easyJet ticket.

However, it's important to note that while the flight itself is not subject to VAT, some additional services provided by airlines may be. These can include in-flight meals and drinks, as well as extra services like additional baggage or seat selection. These services are typically subject to the standard rate of VAT.

Source HMRC article:

Yes, VAT is applicable on UK domestic flights. According to the HMRC's interpretation of 'operating for reward on international routes' within the meaning of Article 148(f) of the EU VAT Directive, a domestic route is one that is between any two places within the UK, Isle of Man or between the UK and the Isle of Man and includes routes with a flight path that may not be wholly within UK airspace. Therefore, any route that is not a wholly domestic route within the UK is considered an international route and is zero-rated for VAT. As such, flights that are wholly within the UK are not zero-rated and are subject to VAT.

Source HMRC article:

Yes, flights from the EU to the UK are generally zero-rated for VAT. This is based on the interpretation of 'operating for reward on international routes' within the meaning of Article 148(f) of the EU VAT Directive, which includes international charter flights to meet demand from undertakings and private persons. The HMRC takes the view that any route that is not a wholly domestic route within the UK is an international route. A domestic route is one that is between any two places within the UK, Isle of Man or between the UK and the Isle of Man and includes routes with a flight path that may not be wholly within UK airspace. Therefore, a flight from the EU to the UK would be considered an international route and would be zero-rated for VAT.

Source HMRC articles:

When dealing with duplicate transactions or canceled invoices in your VAT return, there are several steps to consider.

For duplicate transactions, if you have submitted identical figures on two different return forms, the second return will be rejected as it equals a previous repayment return. Banking Operations will re-input the rejected return as soon as it is generated as a rejection by the computer system. This will release both returns for further processing. If the return fails credibility, follow the instructions provided by HMRC. Banking Operations will then send a Letter 11 form to the local office to advise you that you have submitted a duplicate return.

For cancelled invoices, if tax has been overcharged on an invoice to a customer, you must account for it to HMRC unless the customer is given credit for the tax overcharged. If you wish to correct the error, this correction should work through the accounting system during the tax period in which the error was discovered. If the amount is significant, it may be appropriate to issue a reference to enable independent cross checks to be made on the accuracy of the receiving traders records, or for the next officer to check that you have accounted for the full amount of VAT.

In both cases, it's important to ensure that all VAT registration numbers are valid. You can check a VAT registration number using the UK VAT number checker or the VAT Information Exchange System (VIES).

MTD stands for Making Tax Digital, a UK government initiative that sets out a vision for the 'end of the tax return' and a 'transformed tax system' by 2020. HM Revenue and Customs (HMRC) states that the main goal of MTD is to make tax administration more effective, more efficient and easier for taxpayers through the implementation of a fully digital tax system.

Under the MTD rules, businesses registered for VAT with a taxable turnover above the VAT threshold (£85,000) are required to keep digital VAT business records and send returns using Making Tax Digital (MTD)-compatible software. The vast majority of businesses will need to do this for VAT periods starting on or after 1 April 2019. Businesses with a taxable turnover below the VAT threshold can also sign up for MTD voluntarily.

When you move to the flat rate VAT scheme, you do not need to account for VAT on all purchases and supplies. Instead, you calculate your net liability by applying a flat rate percentage to the VAT inclusive turnover.

Under this scheme, your expenses will likely be shown inclusive of VAT as it is irrecoverable, similar to a business not registered for VAT. The flat rate VAT payment may be shown as a profit and loss expense rather than deducted from total turnover.

If there is irrecoverable VAT on capital items, it will form part of the cost of the asset on the balance sheet and of the cost for capital allowances purposes. For example, if a new machine is purchased (qualifying for capital allowances) at a cost of £2,400 including VAT of £400, and if VAT is not reclaimed on the asset, the cost for capital allowances purposes will be £2,400. If VAT is reclaimed, the cost will be £2,000.

Source HMRC article: