Unit 35 Help! VAT

Mich

Hi,

Does anyone have any pointers as to what the effect would be on a company if they began to sell items or services ranked as exempt from VAT??

So confused.......

Also,
if VAT of £125 was omitted in error from an invoice sent in from a supplier earlier how should the invoice of £125 VAT that has just been sent in be treated when the company comes to prepare the VAT return for the quarter?????

THANKS SO MUCH!

RyanW

Hi Mitch,

If a 'company' is Exempt from VAT... then it literally is. I.e there are no VAT returns as they cannot claim Input, or Output on their VAT. Simple as that. Try not to overcomplicate things.

Seccondly, it wouldnt be prudent to recognise the vat element on the invoice, as their is no source / prime documentation to support nor justfy it... say for purposes of a VAT inspection by HMRC. Although depending on materialty in relation to the volume and expenses of input, a business would usually manually account for the VAT, and put it through the accounts / VAT return. Although this is not standard or ethical practice, it is based upon 'general' expereince.

TAH!