Contactless Payment and VAT – What documentary evidence do you need to reclaim VAT?

28th August 2020

When it comes to knowing what paperwork is required to successfully reclaim VAT on expenditure, there can be some confusion, especially in these times of ever increasing electronic and paperless transactions. HMRC’s VAT guidance says you must have the appropriate documentary evidence in order to support a VAT claim. But what is appropriate? In this article Richard Alecock seeks to clarify the somewhat muddy waters….

What information is required for a valid VAT invoice?

HMRC list the following information as requisite for a VAT invoice to be valid:

  • Supplier business name and address
  • Supplier VAT registration number
  • Unique invoice number
  • Invoice date
  • Tax point (time of supply) if different from the invoice date
  • Customer name and address
  • Description of the goods or services supplied
  • Quantity of each item
  • Price per item excluding VAT
  • Rate of any discount per item
  • Rate of VAT charged per item
  • Invoice total excluding VAT
  • Total amount of VAT
  • Invoice total including VAT

There are however a couple of concessions:

Concession 1

HMRC will accept a simplified invoice for retail supplies under £250. This covers receipts such as those issued by petrol stations, high street stores and restaurants etc.

The requirements for a simplified invoice are as follows:

  • Supplier business name and address
  • Supplier VAT registration number
  • Unique invoice number
  • Tax point (time of supply)
  • Description of the goods or services supplied
  • Rate of VAT charged per item
  • Invoice total including VAT

Concession 2

You can reclaim VAT on supplies of £25 or less without a receipt, with the caveat that you can show that the supplier is VAT registered. This £25 limit is tax-inclusive. Examples of this would be road tolls, car parking charges or even a situation where a receipt was not requested or has been lost or mislaid.

What if I can’t obtain a VAT invoice

There may be a reason that you can’t obtain a valid VAT invoice from a supplier. All is not lost however, as HMRC have the power to exercise discretion and accept the claim for VAT where you can show to their satisfaction that:

  • the purchase actually took place, this might include alternative documentary evidence
  • it was a purchase for your business
  • you made reasonable checks about the supplier
  • there was a commercial arrangement between you and the supplier

The alternative documentary evidence must show that VAT has been charged on the supply and that you have paid it – a corresponding entry on a bank statement which can be linked to the supplier will do. You’ll also need evidence that the goods or services were actually used by your business.

Online Purchases

With an increasing number of purchases taking place online, be careful with claiming VAT on such expenditure. With the big online retailers such as Amazon, it is not sufficient to support a VAT claim with a screen-print of the purchase confirmation page – there are many businesses that sell on the Amazon platform. The recommendation is to log in to your account, and from the “Your Orders” page there is an option to view and print a VAT invoice.

Conclusion

Wherever possible, obtain a full VAT invoice, as this will make life with HMRC easier. However, if you cannot obtain one for whatever reason, take advantage of the concessions for smaller purchases, and for larger purchases, obtain alternative documentary evidence and proof of purchase to support your VAT claim.

 

 

Other items in Blogs
Ruth Pearson
23rd June 2022 Changes to National Insurance

In April 2022 we saw Employee’s National Insurance Contributions increase by 1.25% from 12% to 13.25%, as part of the Governments Health and Social Care levy. Employer’s National insurance also increased from 13.8% to 15%. From April 2023, the health and social care levy will be paid separately to National Insurance and become a tax…

James Selby
23rd June 2022 Pensions Contributions: Maximise tax relief

We are seeing more and more cases of individuals missing out on claiming higher rate tax relief on their employee pension contributions especially where they are not in self-assessment and required to file tax returns.   Where employers have enrolled their staff to make employees pension contributions via a ‘relief at source’ scheme, the contributions…

Paul Jefferson
14th June 2022 VAT Penalty Changes

A new penalty regime will come into effect for VAT periods starting on or after 1 January 2023. The changes will impact the charges for missing VAT filing and payment deadlines and will be replacing the current surcharge system. These changes place continued importance on being up to date with your VAT returns, aware of…

Liz Simpson
13th June 2022 NIC: All Change!

HMRC Changes to the National Insurance contributions for 2022-2023 tax year, are you confused? Due to the COVID-19 strain on the NHS, the government announced that they would be increasing the National Insurance contributions by 1.25% as a means to increase spending on health and social care. The Health and Social Care Levy was applied…

Jaimie King
10th June 2022 30-Jun-22: Covid Recovery loan deadline approaching

Time is running out for businesses to apply for Recovery Loans, the follow on Covid-support product from the CBILS.   In order to qualify for the Recovery Loan Scheme (RLS), your business has to have been affected by Covid-19 and you have to apply and have received the funds by 30th June 2022. The RLS…

Stephen Malkin
7th June 2022 Virtual Finance Officer: Outsource your book-keeping to us

Following the increase in use of cloud accounting software’s like Xero, QuickBooks and Sage over the past few years, businesses have never been better positioned to look to outsource their accounting function.  For all businesses, getting the accounting function working efficiently can be challenging, as you will need potentially different people with different skills: someone…