Reclaiming VAT on a credit purchase made by company director?

noitsnotme

Grumpy_chap said:

What is the situation if the business buys an item over £250 on a retail basis, so there is a receipt stating the supplier, goods supplied and VAT, but not the purchaser?  Say, it is simply a till receipt, or says "cash sales"?

A till receipt would say if it was a card or cash payment.  If a card payment then surely there would need to be a corresponding card payment transaction on the business bank account for it to be legitimate?  And if cash, then why not just draw cash from the business bank account in the first place prior to purchasing.

Jeremy535897

I think the only solution is to request a proper VAT invoice.

MaryJaneParker

Jeremy535897 said:

The attached link explains where you can deviate from the requirement to have an invoice in the name of the company rather than its employee:
https://www.haescooper.com/reclaiming-vat-on-employees-expenses/

It certainly won't apply to a phone over £250. The reference to gaming is also unhelpful, unless that is the company's business.

Thank you for the link. I believe what this is referencing is just the standard rule that if the purchase has a value of over £250 then a proper VAT receipt is needed and a simple receipt will not do. From what I can tell so long as I have a VAT receipt in my companies name this should not be an issue, irregardless of who paid for the purchase. It was made in the companies name on behalf of the company with a loan from the director. My only query really was if anything changes in regards to the fact that it is being paid my myself in installments rather than upfront, but so far it would seem it is the same as any other purchase.
I mentioned gaming because as I said the company makes apps AND games.
Thanks

Jeremy535897

MaryJaneParker said:

Jeremy535897 said:

The attached link explains where you can deviate from the requirement to have an invoice in the name of the company rather than its employee:
https://www.haescooper.com/reclaiming-vat-on-employees-expenses/

It certainly won't apply to a phone over £250. The reference to gaming is also unhelpful, unless that is the company's business.

Thank you for the link. I believe what this is referencing is just the standard rule that if the purchase has a value of over £250 then a proper VAT receipt is needed and a simple receipt will not do. From what I can tell so long as I have a VAT receipt in my companies name this should not be an issue, irregardless of who paid for the purchase. It was made in the companies name on behalf of the company with a loan from the director. My only query really was if anything changes in regards to the fact that it is being paid my myself in installments rather than upfront, but so far it would seem it is the same as any other purchase.
I mentioned gaming because as I said the company makes apps AND games.
Thanks

I may be missing something obvious, but I don't know how you can get the company to be invoiced, but you take on the finance to buy it personally?

Grumpy_chap

Jeremy535897 said:

I may be missing something obvious, but I don't know how you can get the company to be invoiced, but you take on the finance to buy it personally?

OP Ltd buys a £1,200 phone (£1k + VAT)
OP Ltd has no funds.
OP introduces funds to OP Ltd through Director's Loan
OP also has no funds
OP borrows the funds to introduce to OP Ltd.

Maybe I also missed something?

Jeremy535897

Grumpy_chap said:

Jeremy535897 said:

I may be missing something obvious, but I don't know how you can get the company to be invoiced, but you take on the finance to buy it personally?

OP Ltd buys a £1,200 phone (£1k + VAT)
OP Ltd has no funds.
OP introduces funds to OP Ltd through Director's Loan
OP also has no funds
OP borrows the funds to introduce to OP Ltd.

Maybe I also missed something?

If you buy a car on finance, you have to own the car. The finance is secured on the car. The finance company repossesses the car if you can't pay. If you go to buy a car on finance, and say "please invoice my mother, as it will be hers, but she has no money or assets, so I will pay for it, as long as you lend me the money," I doubt they would be interested.

If OP takes out a personal loan, and then chooses to use the funds to lend his company the money to buy it, that is fine, but I don't think that's what is happening here.

Grumpy_chap

I've never used Klarna, but I understood Klarna was little more than a payday loan, except with changed rules since PDLs are not really allowed in the same way any more.  Oh, and Klarna has hip and trendy image aimed at young people.

InMyDreams

Grumpy_chap said:

Except mileage claims, which don't have an accompanying VAT-receipt, but the legislation permit an element of input VAT to be claimed.

Mileage claims do actually need accompanying VAT receipts if you want to reclaim VAT on the fuel element. You still need an appropriately dated fuel receipt showing at least the amount of VAT being reclaimed. This is precisely why you are always asked if you need a receipt when you buy fuel.

Edited to add link: https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit55400

Grumpy_chap

InMyDreams said:

Grumpy_chap said:

Except mileage claims, which don't have an accompanying VAT-receipt, but the legislation permit an element of input VAT to be claimed.

Mileage claims do actually need accompanying VAT receipts if you want to reclaim VAT on the fuel element. You still need an appropriately dated fuel receipt showing at least the amount of VAT being reclaimed. This is precisely why you are always asked if you need a receipt when you buy fuel.

Edited to add link: https://www.gov.uk/hmrc-internal-manuals/vat-input-tax/vit55400

Thank you for the link.  I still read the part under the heading "Input tax when employees are paid a mileage allowance" as not needing vat receipt?

InMyDreams

I read that section as that dealing with the additional complication of mileage allowance; that of how to calculate the business fuel element of the allowance and what *extra* evidence is needed, over and above that described in the section above that relates to all fuel purchased by employees (covering both actual expenditure and mileage allowance). There's nothing to suggest that using a mileage allowance negates the VAT receipt requirement in the section above.

By no means an authority, but a popular mileage recording app, Tripcatcher, seems to interpret it in the same way: https://www.tripcatcherapp.com/blog/vat-on-mileage-and-mileage-claims/

I insist my boss keeps his receipts. In practice I'm sure many small businesses fall foul of this rule (if it even is one) and I have no idea whether HMRC are even bothered. I would be very interested to hear the views of the professionals on this board.