Can I deduct VAT from my self assesment?

[robbob]

section 44

Can we go right back to the start and clarify things here.


Would you not agree that hmrc are happy for individuals to complete the self employed page of return with all amounts including vat (sales and expenses) and then treat vat due as an expense ?- this isn't a particularly common way of doing things (and probably not best practice to avolid possible confusion) but the guidance linked earlier is clear that this approach is acceptable to hmrc.


This being the case if the OP is including all sales and expenses as being vat inclusive and claiming vat due as an expense then would you agree that your earlier advise isn't really relevant for this circumstance? in that event even where vat is recoverable the expenses shown by the OP on their tax return will be inclusive of vat - as there is a matching restriction on the claim included within the vat due entry.

[robbob]

What is classed as irrecoverable VAT?

Please could you clarify that please.

So going ahead, I can

- put down my income inclusive of VAT
- put down my expenses inclusive of irrecoverable VAT only
- and I can put down my VAT payments as an expense.

There appears to be an element of confusion on this thread i would recommend you wait till we have sorted the query i have raised with section 44 before we proceed in sorting this out - Section 44 has raised the valid point that input vat reclaimed can't be claimed - but it is acceptable as far as i am concerned to include the gross vat inclusive expense and then adjust for the vat element of this expense by way of including this in the "vat due" figure which you would include in box 30 this is in some respects an automated process in that box 30 is simply performing the function of netting everything down.


The most important thing here is that if you claim vat paid as an expense then your sales entered on the return must be gross vat inclusive amounts

[section 44]

What is classed as irrecoverable VAT?

VAT that you cannot be recover.

[section 44]

input vat reclaimed can't be claimed

indeed

[robbob]

Hello Ash

This thread will be getting very confusing for you i guess

In summary as far as i am concerned
As long as you are including all sales and expense in your return as being inclusive of vat, you can then deduct vat due for the year as an expense.


The issues pointed out by section44 and Nikki with regard to only including gross amounts only where vat is not recoverable are completely irrelevant from a practical perspective as you will ALWAYS be using vat inclusive amounts in your calculations and these will automatically be netted down when the vat due for the year is included separately.

For example, if my total stock purchases that I have reclaimed VAT on, are £50,000, I have put down £50,000 as the total amount for that specific purchase. That obviously includes the VAT of £8333.33.

Is this right or wrong?

For added clarity entering the 50k is completely right and this is right due to the fact that the "vat due for the year" figure you will include on return includes within its total an adjustment for a negative sum amounting to the 8,3333 - getting the overall profit figure back to where it should be.

[bd6759]

Put down your total sales including vat.

Deduct your total expenses, including VAT.

Look at the net VAT position for the year. If you have paid VAT to HMRC, it is an expense. If you have receiveded a refund of VAT, it is income.