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Apologies for late reply.
You are precisely correct. In the case of a margin-scheme trader selling goods at a loss, there is no ‘loss relief’ to claim, such as when the profit on item A can be offset against a loss on item B. The loss on item B produces a ‘nil’ VAT liability. However, the global accounting scheme losses on an item are automatically offset against profits on items. Thus losses and profits are offset together in the period. Also note, with the global accounting scheme, all purchases made in the period are included, even if those goods are not actually sold in the same period.
Apologies late reply.
Answer to Question 1:
You need to select which category is the closest match to your business activities and if you have more than one type of business activity, the flat rate category should reflect the one that generates the highest level of income.
It is very important that you make a note in your files as to the reasons why you have chosen the category – this is necessary in case you ever need to show HMRC why you decided the category you had chosen was the best fit.HMRC’s VAT Notice 733: Flat Rate Scheme for small businesses covers the issue of choosing the correct VAT sector and section 4.2 says: “HMRC will not change your choice of sector retrospectively as long as your choice was reasonable. It will be sensible to keep a record of why you chose your sector in case you need to show HMRC that your choice was reasonable.”
UPDATE – IMPORTANT:
On 23rd November 2016 HMRC announced changes to the flat rate scheme from April 2017 with regards to a new flat rate scheme category, the ‘limited cost trader’ – we have written an article below which should be read in conjunction with this article: HMRC says that a limited cost trader is a business that buys only a few goods. More specifically, a limited cost trader’s spend on goods, including VAT, in a quarter is: less than 2% of its VAT-inclusive sales for that quarter,or more than 2% of its VAT-inclusive sales for that quarter, but less than £250. If it turns out that you are a limited cost trader, you need to apply the 16.5% limited cost trader percentage to your VAT-inclusive sales for that quarter when you’re working out how much to pay HMRC – don’t use the usual rate for your trade.Answer to Question 2:
It is important to keep proper records and filing in place. If you are unable to find the funds to bring your account up to date immediately, one option is to speak to HMRC about the possibily of a Time to Pay (TTP) arrangement. This lets a company settle its tax arrears through a series of monthly repayments rather than having to pay the whole amount at once.if you need assistance with having an accountant maintaining your books and filing returns, please let me know.
If you trade in second-hand goods, works of art, antiques and collectors’ items, you may be eligible to use the Margin Scheme. The Margin Scheme allows you to calculate VAT on the difference (or margin) between your buying price and your selling price. If no profit is made (because the purchase price exceeds the selling price) then no VAT is payable.
If you use the Margin Scheme there are special rules for completing boxes 1, 6, and 7 on the return is shown below (the rest of the boxes are completed in the normal way). If you also trade in goods and services outside the Margin Scheme you must account for those supplies on your return in the normal way (described in Section 3).Box 1 VAT due on sales
Include the output VAT due on all eligible goods sold in the period covered by the return.Box 6 total value of sales
Include the full selling price of all eligible goods sold in the period, less any VAT due on the margin.Box 7 total value of purchases
Include the full purchase price of eligible goods bought in the period.There is no requirement to include Margin Scheme purchases or sales in boxes 8 and 9 of your return.
Further information about the scheme is available in VAT Notice 718: https://www.gov.uk/vat-margin-schemes/vat-return
If you trade in second-hand goods, works of art, antiques and collectors’ items, you may be eligible to use the Margin Scheme. The Margin Scheme allows you to calculate VAT on the difference (or margin) between your buying price and your selling price. If no profit is made (because the purchase price exceeds the selling price) then no VAT is payable.
If you use the Margin Scheme there are special rules for completing boxes 1, 6, and 7 on the return is shown below (the rest of the boxes are completed in the normal way). If you also trade in goods and services outside the Margin Scheme you must account for those supplies on your return in the normal way (described in Section 3).Box 1 VAT due on sales
Include the output VAT due on all eligible goods sold in the period covered by the return.Box 6 total value of sales
Include the full selling price of all eligible goods sold in the period, less any VAT due on the margin.Box 7 total value of purchases
Include the full purchase price of eligible goods bought in the period.There is no requirement to include Margin Scheme purchases or sales in boxes 8 and 9 of your return.
Further information about the scheme is available in VAT Notice 718: https://www.gov.uk/vat-margin-schemes/vat-return
Firstly VAT is only charged by a VAT registered business with a UK VAT number.
Secondly VAT for services is generally based on where the recipient resides. Hence if you are not resident in UK and are based in USA, you should not be charged VAT. You can ask the agent to refund you/reissue the invoice as you can not claim it from the UK tax office.
Hope this helps.
Ok I understand your question but you should use actual figures (and hardly estimates). You look at your past turnover during a rolling 12 month period OR turnover for the 30 days alone if it reaches the VAT threshold.
The turnover is VAT exclusive (not including VAT) in your numbers.
Exempt supplies are excluded from your turnover for VAT registration purposes. But beware if you use the Flat Rate Scheme, because such income is included as ‘business income.’
Regards
If you’re importing a second-hand vehicle, you will not pay VAT since it has already been paid in the country where you are importing the vehicle from (if any EU country including the UK).
However, you may need to get a local VAT expert to get more information on Cyprus VAT.
No you can not charge VAT unless you are VAT registered.
For further details on VAT registration see here: https://www.vatforum.co.uk/post/under-threshold-charge-vat-10201925?pid=1309132025&highlight=threshold
Well you are not required to register for VAT.
You are required to register for VAT if past 12 months sales are above the threshold of £85k or if the next 30 days alone, you will breach the threshold.
If your case none of these two tests apply.
However, you can register for VAT voluntarily if you see the benefits outway the costs (usually for business with more costs than revenue, hence will claim VAT than pay)
Regards
I guess your services are for customers who are in business.
Place of business for services is where the buyer of the services is located.
So if you are providing services to a UK based customer, and details recorded in box 1 and box 6.
If you are supplying services to a customer in a member state of the EU, that supply is subject to the VAT rules of that member state and not those of any other country and such supplies are said to be ‘outside the scope’ of UK VAT and no VAT charged. You however complete Box 8 and EC Sales list. When to complete box 8 of your VAT Return, HMRC will automatically send you an EC Sales List to complete.
If the place of supply of your service is not in the EU, then your supply of services is outside the scope of VAT. You don’t charge VAT or include the sale on your VAT Return.
If the place of supply of your service is not in the EU, then your supply of services is outside the scope of VAT. You don’t have to charge EU VAT or include the sale on your VAT Return. http://www.hmrc.gov.uk/vat/managing/international/exports/services.htm
But Sch 1, para 10 allows you to register for VAT in the UK and recover input tax.
Also worth to look at this case to answer your main question: HMRC v Wetheralds Construction – The reduced rate for energy-saving materials
This case concerned the classification for VAT purposes of a product offered by Wetheralds which is designed for conservatory insulation. The FTT agreed with Wetheralds on its assertion that the supply being made was a single supply of the installation of energy saving materials and therefore attracted the reduced rate of 5%. HMRC disputed this decision, claiming that the installation amounted to more than energy saving materials and should be regarded as a supply of a new roof as new tiles were put down, meaning the supply was standard rated as more than merely insulating material was supplied. The case was referred to the Upper Tribunal (UT).
The UT concluded that the FTT had failed to consider, in enough detail, the extent to which the supply was a roof rather than an addition of energy saving materials to the pre-existing roof UT found that the supply of a roof system did not fall within the reduced rate provisions of VATA 1994 Sch 7A Group 2 and concluded that a replacement roof is not an energy saving material, it is a roof and thus the supply should have been standard rated.
Firstly, the reduced rate only applies to supplies of energy-saving materials made by installers, not to purchases by a business or for DIY use. Also, note the reduced rate has been removed from supplies of energy-saving materials for use in charitable buildings from 1 August 2013.
The best starting point is https://www.legislation.gov.uk/ukpga/1994/23/schedule/7A?view=plain schedule 7A Group 2 — Installation of energy-saving materials Supplies of services of installing energy-saving materials in residential accommodation; which lists all the supplies that qualify for reduced rate. Most of the supplies you listed above including solar panel, wind/water turbines are specifically listed and eligible for reduced rate. Double glazing and energy-efficient domestic appliances do not qualify for the reduced rate. However, heating not reduced rate unless supplied under a “relevant scheme” to a “qualifying person” ie grant to old pple, pple on benefits etc under Group 3 which lists supply only included so far as grant-funded.
Its also important to note that UK’s Group 2 is not in line with EU, in particular, it is held to be outside of the permitted supplies within Annexe III of the Principal VAT Directive and the CJEU has raised an infringement by CJEU. According to EU, the reduced rate should only apply under a defined social policy and should not be “open to all”.
UK has proposed draft legislation “Value Added Tax (Reduced Rate) (Energy-saving Materials) Order 2019” which intends to reduce the scope the existing Group 2. No one knows whether these changes will be implemented after Brexit.
Firstly your supplies fit squares on the digital services – see list here: https://www.gov.uk/guidance/the-vat-rules-if-you-supply-digital-services-to-private-consumers#define-digital
However in your case, it seems this para is applicable “Unless you sell digital services entirely through digital platforms or marketplaces, who take on responsibility for accounting for the VAT due, you must consider how you intend to account for VAT on supplies of digital services to consumers”, in which case you don’t need to worry about VAT registration.
It might be worth asking the platform providers on who takes on responsibility for accounting for the VAT due.
Hope this helps.
If you provide services to customers outside the EU, you usually do not charge VAT. However, if the service is used in another EU country, that country can decide to charge the VAT. You may still deduct the VAT that you paid on related expenses, such as for goods or services purchased specifically to make those sales.
