- This topic has 3 replies, 2 voices, and was last updated 8 hours ago by
.
- Posts
Dear Sir,
My concerning doubt is related to Supplies outside the scope of VAT – I am referring to ACCA Study Hub Notes related to the exam TX
here the definition goes something like this – These are supplies which are not Exempt supplies but are never treated as a supply for VAT.
https://www.gov.uk/charge-reclaim-record-vat/when-not-to-charge-vat According to this website
examples can include
• goods or services you buy and use outside of the UK
• statutory fees, like the London congestion charge
• goods you sell as part of a hobby, like stamps from a collection
• donations to a charity, if given without getting anything in returnExamples in the Study Hub include
• wages and dividends;
• the transfer of goods arising from a business being sold or otherwise transferred as a going concern;
• certain gifts of goods and services;
• intra-group transactions if there is a VAT group registration in place;
• exports of services to all business customers located in countries not within the UKthen the Study hub also mentioned this point – Although no output VAT arises on such a supply, related input VAT is still recoverable.
Here I am a bit confused –
Doubt 1 – how can they claim an input for them – is my logic correct here or it requires some correction.
for example for donation you can claim the input vat for goods given to donation ?
for intra-group – only the first entity within the group can claim ?
for Sale of business as a going concern – we cannot claim output vat but the Seller would have claimed all the previous Inputs – so the example is valid?
https://www.gov.uk/guidance/vat-guide-notice-700
Doubt 2 is the concept referring to Section 5.4 Services received from outside the UK here,
where the input can be claimed but via reverse charge mechanism for services imported outside UK
thank you for your guidance
Also could you please confirm if my understanding related to this table is correct
Goods Services
Export B2B/B2C B2B – no output VAT
Output VAT cannot be charged B2C – Output VAT Charged
Input VAT related to the export can be claimed Input can be claimedImport Output VAT charged Output VAT charged
Input VAT claimed (Reverse Charge) Input VAT claimed (Reverse Charge)Outside the scope means that they do not feature in the VAT system at all.
For example, If a person is VAT registered because they run a business and they are also employed part-time, they would not charge VAT on their wages as wages/employment income is outside the scope of VAT. The same goes for dividends – that person would receive dividends (a form of income) but dividends are outside the scope of VAT.
VAT is charged on the taxable supply of goods and services IN THE UK by a taxable person IN THE COURSE OF THEIR BUSINESS.
IN THE UK = VAT can be quite complicated but this is why overseas transactions have special rules. Generally exports are treated as zero rated and so there is no output VAT charged but input VAT can be reclaimed. The exception to this is where services are supplied by a UK business to an overseas non-business customer (e.g. a member of the public) where UK VAT would be charged as normal. For imports, for goods postponed VAT accounting (PVA) applies and for services the reverse charge applies. For both PVA and the reverse charge, the UK business importing the goods/incurring the service from an overseas supplier is effectively treated as selling those goods/supplying those services to itself and must account for both output VAT and input VAT. This is generally just an admin issue.
IN THE COURSE OF THEIR BUSINESS = goods you sell as part of a hobby are not in the course of business.
Donations to charity (up to certain limits) are not treated as supplies for VAT but the input VAT can be reclaimed. This is to encourage businesses to donate surplus stock etc to charitable causes.
Transfer of a going concern (TOGC) is outside the scope of VAT which means that no output VAT is charged by the seller and no input VAT can be reclaimed by the buyer.
Where a VAT group is in operation, the group is treated as a single entity for VAT (i.e. as if it were one business), therefore there is no VAT on intragroup supplies.
Also could you please confirm if my understanding related to this table is correct
Goods Services
Export B2B/B2C B2B – no output VAT
Output VAT cannot be charged B2C – Output VAT Charged
Input VAT related to the export can be claimed Input can be claimedImport Output VAT charged Output VAT charged
Input VAT claimed (Reverse Charge) Input VAT claimed (Reverse Charge)This isn’t a table so I don’t quite understand what you’re trying to say.
Goods – exports = zero rated
Goods – imports = PVAServices:
UK business to overseas non-business customer (B2C) = UK VAT charged as normal
UK business to overseas business customer (B2B) = zero rated
Overseas business to UK business = reverse charge
- You must be logged in to reply to this topic.