VAT annual adjustments - it's time to act to ensure claims are maximised
Businesses that generate income that is exempt from VAT (those in the financial, insurance, healthcare, property sectors, to name a few) or have activities that are classified as being non-business (provided for free) are required to perform VAT partial exemption and non-business calculations to confirm the value of VAT they can claim back from HMRC.
They are also required to perform annual adjustment calculations to “average” their recovery over each 12 month period. This can result in additional repayments or payments of VAT from or to HMRC. It also provides an opportunity to reflect on the overall VAT position and to make refinements that can result in savings or efficiencies.
Adjustments need to be included on VAT returns for June/July/August VAT periods - depending on when VAT returns are submitted to HMRC.
Adjustments can also affect expenditure that is subject to the capital goods scheme, and once again additional repayments or payments of VAT may be due from or to HMRC.
Over the last two years many VAT calculations have been adversely affected by the impact of Covid-19 and lockdown measures. If partial exemption and non-business calculations no longer produce a fair and reasonable outcome, action should be taken to ensure that VAT recovery continues to reflect the use of expenditure.
We would urge businesses that may have a distorted VAT recovery position (and who those who don’t also) to get in touch with their local VAT specialist or usual Azets contact to confirm their VAT recovery procedures are still relevant and effective.
- Graham + Sibbald Open Dunfermline Office
- Why Should Companies Make the Move to Electric Cars?
- Something for Everyone at Blair Horse Trials 2022
- Blackadders LLP Employment Law Team Shortlisted for the Scottish Legal Awards
- Scotland’s Onshore GDP Decreased by 0.5% in April
- Energy Bill and Tax Rebate Scams on the Rise
- Steel import tariffs extended for two years
- MSPs Back Making Emergency Covid Powers Permanent
- Inflation pushes UK government interest costs to May record
- Second 24-hour rail walkout after talks collapse
- British Airways Heathrow staff back summer strikes over pay
- People cut back on food shopping as price rises bite
- New £2m fund to cut environmental impact of textiles
- New £200 million to back innovative agriculture projects
- Landlord warning over making Covid eviction laws permanent
- G7 Leaders detail $600bn plan to rival China's Belt and Road initiative
- Independent report into funding for tax and welfare devolution
- Scottish councils given powers to run own bus services
- Royal Mail workers to vote on strike over pay
- Scottish film industry projected to grow to £1 billion by 2030
- Scottish Government announces £10m investment in net-zero energy
- 19 October 2023 proposed as date for second Scottish Independence Referendum
- Great Perthshire Festival 2022
- Courier Awards