VAT - no paperwork, no problem

The VAT may not be obvious

When you and your employees are out of the office or working from home, you may well incur business expenses, e.g. parking, telephone, Internet charges etc. and these costs will often include VAT. So if you're not claiming the VAT back, you will be losing out. How do you tackle this?

So what's the problem?

Where you purchase direct from a supplier you would usually receive an invoice that clearly shows whether or not VAT has been charged. You would claim this input VAT on your next return. But what if you don't have a nicely printed invoice, just a scrawled petty cash voucher, a receipt with a vague description of the expense or, worse still, nothing at all? Is there any hope of claiming the VAT back? The good news is "yes", subject to certain conditions being met. So what kind of expenses should you be looking out for?

Type of expenses

Expenses that your business reimburses to you or your employees, such as motor fuel costs (including the fuel proportion of mileage allowances), parking and toll charges, subsistence payments, home telephone and Internet charges, are all likely to include VAT.

Is a claim worth the effort?

If you and, say, nine employees have each spent £10 per week on parking over the last year, then the VAT you have paid in total will be in excess of £750. That's easy money to claim and if you missed out on that, what else is there that's passing you by? Have a think about it.

Conditions

Make sure you get a receipt if possible. If the expense is less than £250, the receipt or invoice only needs to show limited information. However, the following expenses don't require a receipt at all but they are limited to costs of less than £25 (inclusive of VAT) per transaction:

coin-operated machines
car parking (but not at meters)
toll charges
telephone calls

Apart from the above exceptions, the usual conditions for input VAT recovery will apply.

Conditions and procedures

Tip 1. Make sure your company expenses claim forms allow for VAT-inclusive expenses and that your employees show the VAT where it applies. Unless you have a receipt or invoice, you may only claim the VAT if you have properly recorded the expense. So make sure you and your employees itemise the cost in question on their expenses claims and that your bookkeeper is aware that they carry VAT.

Tip 2. You are allowed to claim input VAT that you have missed from your returns in the previous three years. So don't wait - you could be missing out on a tidy sum.

VAT - no paperwork, no problem

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