• ICAEW
  • XERO GOLD PARTNER
  • KASHFLOW

 

0161 928 3276

 

 

We understand our clients

July Question and Answer Section

Newsletter issue - July 2013.

Q. My company provides website hosting for businesses based in the UK and in other countries. For VAT purposes is this treated as a sale of goods or services?

A. There is an easy rule of thumb to decide whether something is goods or services for VAT purposes: can you pick it up and hold it? Yes: goods, No: services. Website hosting can't be physically picked-up therefore it's a service. There are some complex VAT rules for selling services across international borders. You need to know whether your customer is in business or not. Broadly if the customer in another country is a business you do not charge VAT. We need to talk through the detail of what you declare on your invoice and what evidence to collect from your customer.

Q. I run my own consulting company in the UK, which pays my Brazilian wife a small wage for answering the phone and preparing marketing materials. Can the company pay for her to complete an advanced English course at the local college?

A. Training for any employee can be charged through the company if it is relevant to the employee's duties or future duties. An ability to speak and write correct English is necessary for your business so the proposed English course is work-related training for your employee. Your company can pay for the course, and receive a tax deduction for that cost. There will be no benefit in kind charge for your wife. The company can also pay for travel to the course. You should list the duties your wife performs for the company, and both sign the document as part of her employment terms with the company. This description of her duties will justify the training cost, should the Taxman ever ask.

Q. I bought a 200 acre farm last year, where I will be raising rare-breed animals for the high-end restaurant market. I've incurred a lot of costs on fencing and equipment. Can I claim back the VAT on those costs? I've not registered for VAT yet, as my sales have been low so far. I understand there is a simple flat rate scheme I could use.

A. You can't claim back VAT on your costs until your business is VAT registered. However, at VAT registration you can reclaim VAT paid on goods purchased in the four years before registration which are still held at registration date. VAT on pre-registration services can be reclaimed but only for services purchased in the 6 months before registration.

As your main product will be meat, which is zero rated for VAT purposes, you are likely to reclaim VAT every quarter, rather than paying VAT to HMRC. The flat rate scheme for small businesses is not suitable for businesses that regularly reclaim VAT. There is a flat rate scheme just for farmers, but it is very rarely used. We need to discuss the details of your proposed sales to see which VAT scheme may be suitable.

 

To work Smarter in your Business Contact Beauchamp Charles

Contact Us

"Join our newsletter for hints, tips and tax advice"

 

What our clients say

Dakins Property Services

Great Results, Personable, High Integrity

Choice Events Limited

All at Beauchamp Charles are very helpful, approachable and easy to talk to. They keep me informed with key dates; I can feel totally confident that I won't ever miss any deadlines! Whoever I deal with, always deal with matters professionally and efficiently and if they are unavailable they get back to me promptly.

FT leisure Ltd

I have worked with Beauchamp Charles as our management accountants for over 20 years and have never received anything less than exceptional service. Their approach is both professional and personal. Finances and particularly tax strategies are a minefield for small businesses; Beauchamp Charles have in-depth knowledge of these area, which is comforting. They pay very close attention to our business activities and have provided financial strategies that have helped our company develop.

Fredrick Thomas Electrical and Maintenance

We have used Beauchamp Charles since company formation back in 1998. Beauchamp Charles offers us a one to one service as they are small enough to offer this dedicated service and large enough to do the work and offer best advice. They get to know us as individuals and a business, always giving sound advice. Frederick Thomas Electrical are in a stronger place thanks to the service we get from them.

Barnes Walker Landscapes Limited

We are a small business and had employed the same accountancy firm for many years. Two years ago we took the decision to switch to Beauchamp Charles after several othe local businesses recommended them very highly to us. We have not been disappointed with the service they have provided to us over these last two years.