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Frequently asked questions about VAT

/ 1 April 2020

Simon Levine

While many sectors have their own VAT complexities, here are answers some of the most common questions that our VAT specialists are asked by clients across a range of industries.

Q) I should have registered for VAT a year ago. Will I be penalised?

A) In most circumstances, HMRC will impose a late registration penalty. However, there are circumstances where it can be mitigated. Currently for a non-deliberate failure to notify, you can be penalised up to 30% of the VAT that was not declared but with negotiation this could be reduced.

Q) Can I reclaim VAT on my business expenses?

A) This is a complicated issue. It is possible to reclaim VAT on food and accommodation when away on business, but not on something like entertaining a client. It is also possible to reclaim VAT on fuel and motor expenses, although there are various criteria to be met with regards to fuel so this would need to be checked prior to travel.

Q) Can I reclaim VAT on the purchase of a car for the business?

A) HMRC states that VAT cannot be reclaimed on the purchase of a car if it is “available for private use.” Normally, businesses are only allowed recovery on a company car if it remains on business premises overnight and is not allocated to an individual. However, in certain circumstances, vehicles like “twin-cab” pickups are not deemed to be cars and VAT on their purchase can be reclaimed.

Q) As a business, we sell goods to EC customers. How do we verify their VAT registration number?

A) Failure to perform this check and inform HMRC means the customer cannot be established as a legitimate business. This could lead to a hefty VAT bill, as the sale cannot be zero rated. The check can be performed on the EU website through what is known as VIES. A link is posted below to a helpful site. It not only tells you whether the number is valid, but also the name of the business.

ec.europa.eu/taxation_customs/vies/vieshome.do?selectedLanguage=EN

For any questions you may have about your business and VAT, be they general or specific, our VAT team would be happy to help you. Please get in touch using our enquiry form.

Simon Levine

Senior Adviser, VAT

T +44 (0)20 8922 9146
E simon.levine@bkl.co.uk

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