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• # 81216
• Mon 26 Mar 2012 03:17 PM

I have a client that went over the VAT threshold in February so they will need to register from 1st April. 

What procedures should I be aware of?

It's not very fair on a fast food takeaway as most of the food is bought at zero rate and then sold at standard rate. Should they do a stock take on 31st March to reclaim the VAT on any items still in their possession that have VAT on them. How do you deal with changing to VAT in Sage? How easy is it to reclaim VAT in Sage going back the three years for items of equipment they still have? (Not sure if you can go back four years but the shop has only been open for three). What procedure is carried out to recclaim this VAT?

They currently use the 45p/mile to claim motoring expenses and will continue to do so - is reclaiming the VAT on this easy using Sage. Can the VAT be reclaimed on this (fuel element) or is that only for companies paying employees the mileage rate?

I also have another question about apportionment schemes for VAT but I will have another study of the VAT books before asking on here.

• . http://www.smbps.co.uk/
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• # 81217
• Mon 26 Mar 2012 03:50 PM

You want to check the VAT rules for fast food take aways. As I understand take-aways don't charge vat - only if customer is eating in. i.e that is why macdonals ask if you you are eating in, if so the vat is included! It is the privilage if eating in!When using sage the T1 code is used making sure the settingd is correct with the current vat percentage (20%), and T0 for the particular kind of food - drinks are in the main vatable!

• Paul Ingram
  (01722) 466647
  www.aeternum-bookkeeping.co.uk
  
  
   
  

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• # 81219
• Mon 26 Mar 2012 04:18 PM

Thanks for pointing that out. I never knew things had changed. I'll need to find the relevent documents on HMRC's website before getting back to the client. Any search I've done mentions a court ruling that "could" have implications - I'll need to know when the actual ruling took place from to be 100% certain.

EDIT  : This is getting annoying now. According to the page I've been reading on the HMRC website there still appears to be VAT on HOT food taken away from premises.

3. Premises

3.1 Why is the concept of ‘premises’ important?

You must always charge VAT at the standard rate if you make a supply of food and drink for consumption on the premises on which it is supplied - see also section 1. Also, you must charge VAT at the standard rate if you supply hot take-away food (that is, hot food for consumption away from the premises where it is sold).

It is, therefore, important to know what ‘premises’ means as there will be times when it is not just the outlet where your business is situated.

• . http://www.smbps.co.uk/
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• # 81220
• Mon 26 Mar 2012 04:41 PM

I can find nothing to suggest there has been any change and it looks like VAT still applies to hot food taken away. So the original post still applies.

• . http://www.smbps.co.uk/
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• # 81240
• Mon 26 Mar 2012 10:48 PM

Just to clarify the point made re McDonalds - they ask whether you are eating in or taking away if you are ordering cold drinks or food, as they are zero rated when bought as take-away, per below:

4.1 What is the liability of take-away food and drink?
Hot take-away food that has been heated for the purposes of supplying it hot is always standard-rated. Cold take-away food and drink is zero-rated, provided it is not of a type that is always standard-rated (such as crisps, sweets, beverages and bottled water).Hot drinks are standard rated.

Peasie, in answer to your questions (well, the bits I know the answers to!):
You (or they) need to get on with the registration, if you haven't already!
I would agree that doing a stock take on 31st March in order to reclaim VAT is a good plan.
You change the VAT status in Sage by going to "settings", "company preferences" then onto the VAT tab and completing all the details.
To reclaim the VAT from the previous 3 years will require a manual adjustment to the first VAT return - which you do via the adjustments button after you (Sage) has calculated the amount for the first return.

With regard to your query re VAT reclaim when claiming mileage - I would be interested in other people's view on this! I believe that you can reclaim the VAT on the fuel element, as per employees - but must phone HMRC before I do a VAT return next month to check on this!! To do this on sage you would enter the amount of the fuel claim, either via a bank payment if the money came from the bank account or a journal if not, and put the amount of VAT you have calculated in the VAT column. Sage will not calculate the amount for you. So for my client who did 125 miles last month:
125 x 0.45 = £56.25 (you must have a fuel receipt that at least covers this amount)
125 x 0.18 = £22.50 (18p being the HMRC advisory fuel rate for a diesel over 2000cc)
1/6 £22.50 = £3.75  (the £22.50 is a VAT inclusive amount)

Therefore on sage you would enter 7300 £56.25 T1 £3.75

Hope that makes sense - and I will update once I speak to HMRC to clarify re whether it is the same for business owners as for employees, unless someone else does first!

Helen

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• # 81288
• Wed 28 Mar 2012 04:51 PM

Have a look at the recent budget details also Peasie, I'm sure there are changes: try searching Google with 'Pasty Tax' 

• Too old to die young...

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