What is a VAT Receipt?
Since it was first introduced, VAT has become an integral part of our lives as consumers and business owners. While there are a few items and services that are exempt from VAT charges, chances are that your last transaction featured a VAT charge.
Even though we come into contact with it every day, many people know very little about VAT and VAT receipts. We hope to help with that by talking about what VAT and VAT receipts are and why they’re important in this blog.
What is VAT?
VAT stands for value added tax. In very basic terms, it is a general consumption tax based on the value of the goods and services supplied to the customer. While it usually is a blanket tax for transactions, there are a few items and services that don’t require a VAT charge.
Under UK law, all businesses are required to register for VAT if your taxable VAT turnover goes over £85000. You also have the option to register voluntarily if you wished. There are a few benefits that come with being VAT registered including:
- VAT refunds - Once you’re registered, you can claim VAT returns on all the taxable items and services you purchase for your business. This can be of huge financial help to businesses that operate on a tight budget.
- A VAT registration number - As a VAT registered business, you’ll be given a special number that denotes your registered status. If you operate a smaller business, this can give you a greater air of credibility and help you build your reputation.
- Reclaim past VAT - In addition to the VAT returns on your business expenses, you can be eligible to reclaim up to four years worth of past charges. The amount you can claim depends on how long you’ve been in business. You’re also required to have the invoices and receipts that show the amount you’ve paid.
Can I get a VAT exemption?
Goods and services that are exempt from VAT are referred to as zero-rated. Zero-rated goods and services include cold food from restaurants, sporting activities, lottery tickets, and sponsored charity events.
Unless they trade zero-rated goods or services, both retail and hospitality businesses owners should be conscious of VAT requirements. Every so often the government will introduce VAT changes. It’s good practice to familiarise yourself with VAT and VAT receipt rules so that you know you’re covered.
What is a VAT receipt?
Simply put, a VAT receipt is a receipt issued to the customer by a VAT registered business. Generally, they will show the details of the transaction including the time it was made, the amount of VAT charged, and will have the issuing business’ VAT number on the receipt. VAT receipts can be in either electronic or paper format.
While these receipts may not be particularly important to the average person on the street, they are vital for businesses invoicing their suppliers. For companies to claim back the VAT on goods and services they’ve bought for the business, they must supply a valid VAT receipt.
You may be thinking, “can you claim VAT without a receipt?” The short answer is no. It’s worth noting that letters of intent, delivery notes, and email correspondences do not count as a VAT receipt.
What’s included on a VAT receipt?
For businesses looking to claim back VAT on their purchases, their submitted receipt must include:
- A unique invoice number
- The date the invoice was issued
- The seller’s name or business name with their address
- The seller’s VAT number
- The tax date
- Your name and business address
- A description of the goods or services provided to you
If any of of this information is missing or incorrect, your claim on VAT could be rejected. By taking the time to look over your invoices properly, you can save yourself a financial hit and a future headache.
Simplified receipts
For some businesses, it can be difficult and impractical to include all the required information on their receipts. When this is the case, some businesses can provide what are called simplified VAT receipts.
These shorter receipts have less information on them but still provide the customer with everything that is legally required. The information included on these simplified receipts is as follows:
- The seller’s business name and address
- The seller’s VAT number
- An invoice number
- The date of the transaction or the date the goods or service was provided
- A description of the goods or services
- The transaction total and the VAT
- The VAT rate charged per item
The average person on the street is much more likely to be provided with a receipt like this. These receipts are most commonly issued in retail and hospitality businesses.
What’s the law around VAT?
Under UK law, any VAT registered businesses must provide their customers with a VAT receipt. If a supplier fails to supply you with a VAT receipt, you are legally allowed to request one. Your customers are also entitled to a VAT receipt if you fail to provide one.
In addition to this, all VAT registered businesses must keep a log of their transactions and their purchases. By law, you are require to keep these records for at least six years. It’s important that these records are kept in good condition so it may be worth investing in a filing system. Make sure you keep them safe and organised so that they can be easily accessed.
EPOS that can handle VAT
Now that you have a better understanding of VAT receipts, you should take your business to the next level with Epos Now Complete Solution. If you’d like to hear more about how Epos Now can improve your business, get in touch below.