Vat Return

TALLY Registered Posts: 22 New contributor 🐸
Hi Guys,

I hope someone will be able to help with my querie. I recently started a new job where I have to do the VAT return (fine) but it is for a charity and is partially exempt. Does anyone know what the rules are, or how to calculate what is sent (or re-claimed) from the Inland Revenue (in simple terms please!) Seriously any help would be very much appreciated.:001_unsure:



  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
    Partial exemption is complicated, or can be.
    You have to attribute expenses to either taxable supplies or to exempt supplies, eg if you sell widgets that are standard rated and spend money directly related to the manufacture of the widgets, you can claim this VAT back in full. If you also sell bobbins that are exempt, and you manufacture these but the materials have VAt on them, you can't claim back that VAT, but post teh gross expense to the expense account. For all overheads that cannot be directly attributed to supplies you must pro rata the amout of VAT reclaimed, often based on proportion of exempt/taxable supplies eg if you supply 40% exempt and 60% standard you can claim back 60% of the VAT paid on general overheads and expenses that can't be directly attributed.
    If your exempt supplies are only a small proportion of your total supplies you can forget about partial exemption and claim all VAT back as normal but you will have to go to the VAT notice to read up on what that proportion is as I can't remember.
    I suggest you have a read of that VAT notice anyway.
    good luck :)
    BIG WAL Registered Posts: 133 Dedicated contributor 🦉
    Can you elaborate on why there is partial exemption. I ask because I do VAT for a charity's shop which sells both standard and zero rated items.

    If that is the case perhaps you can use one of the retail apportionment schemes.
  • visha
    visha Registered Posts: 218 Dedicated contributor 🦉
    HI Tally

    It is very unlikely that the charity you are working for is supplying exempt goods. Unless the charity is an educational institution and is wholly funded by Learning Council.

    Faerie advice is good.

    If you have recently started the job with the charity, then there must be a VAT file in the office somewhere with the copies of the past VAT returns filed with HMRC&E and it's workings.

    Failing that the best advise is to speak to your charity's accountants/auditors who will have past copies of VAT returns and it's workings. Ask for a copy and advice/help so that you complete your VAT returns correctly. Otherwise, the HMRC&E's computers will show anomalies and a VAT inspection is most likely. (Not bad if you don't have VAT man's visit experience)

    The exempt supplies do not fall under VAT rules and regulations and therefore both input and output Vat must be excluded from VAT returns workings. (There should be no output vat anyway)

    The zero rated supplies dos have VAT on it but at a zero percent. Therefore It had to be included the VAT workings and returns.

    There are different VAT schemes that you can use but advantages and disadvantages of all the schemes need to be considered before deciding which one to use. However, this will have already been considered by accountants/auditors in the past and therefore they are your best recourse.
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