VAT return - help

LaurenS

My client has attended a course, his invoice shows £4k of which he got a grant of £2.9k leaving an amount payable of £1,100 plus VAT of £800. The VAT on the invoice is showing he can reclaim 20% of the £4k (rather than £1.1k which he is paying), therefore £800. This may be a simple question but what would be the correct treatment for the VAT return and for the accounts. Would you show the £4k as purchases and the £800 input tax reclaimed. With the £2.9k grant received being excluded from the return, treated as a T9 item and outside the scope of VAT?

Many Thanks

Gem7321

I would do exactly as you have said. Enter the invoice as £4K and claim £800 VAT and enter the grant income completely separately as T9.

LaurenS

Thanks Gem7321, much appreciated.