VAT Query

Avatar Image
AJShep79 | 14:58 Tue 05th Sep 2006 | Business & Finance
3 Answers

i work for a solicitors firm and i have a vat query. When a solicitor goes to the court they pay parking, usually in an NCP. On the receipt for the NCP the cost of the ticket is broken down between net and vat. Therefore we are paying VAT on the ticket. Now when i post the ticket on our computer system as a disbursement i will separate it into a net and vat amount, therefore we are claiming that VAT back then. Now when i produce a bill on this file and include the disbursement, if i break the disbursement down into net and vat again then the VAT man is effectively getting his vat twice on this parking ticket. Once from the NCP and again from our bill. We had a vat inspection recently and he told us that what i have written above is correct but it cant be right can it?


1 to 3 of 3rss feed

Best Answer

No best answer has yet been selected by AJShep79. Once a best answer has been selected, it will be shown here.

For more on marking an answer as the "Best Answer", please visit our FAQ.
From what I can interpret, he is not getting the VAT from you, as you are offsetting it against your VAT bill.....claiming it this correct?
That all sounds fine to me:

(The following steps might happen in a different order but the end result will be the same)

Step 1: The solicitor pays for his parking. The VAT element ('X') is now in NCP's bank.

Step 2: NCP pay their VAT bill to HMRC. X is now with the tax man.

Step 3: Your firm reclaims the VAT. X is now back with your firm.

Step 4: Your firm invoices the client, including the VAT ('Y') on the car parking disbursement. (X = Y)

Step 5: Your firm pays it's VAT bill. Y is sent to HMRC.

The end result is that your company 'breaks even' but the client pays the VAT to HMRC. (As you've said, HMRC gets the VAT twice, in steps 2 & 5, but pays it back to you in Step 3, so the tax man only receives one VAT payment in total).

Question Author

1 to 3 of 3rss feed

Do you know the answer?

VAT Query

Answer Question >>