It's VAT time of year again
2 Jun 08
This is the time of year that annual partial VAT exemption, business, non-business calculations and capital goods scheme adjustments are required to be made
Returns allow the provisional recovery of VAT incurred on expenses. For exempt or non-business activities, an element of input tax is normally blocked from recovery. This provisional recovery must be averaged and confirmed once a year. These adjustments are normally made on the first return of each VAT year – June, July or August.
The calculations are compulsory but many fail to perform them, resulting in exposure to assessment from HMRC and the risk of unbudgeted costs.
This is an excellent time to consider other basic VAT questions: Have associated VAT rules changed? Has VAT been correctly accounted for on all income?