Category: VAT

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Single Use Carrier Bag charge – VAT implications (Part 2 )

What happens if a retailer charges the customer more than the minimum 5 pence for a single use carried bag?

 

If we look an example where a retailer charges 12 pence for a single use carrier bag.

The full amount of the 12 pence is subject to VAT.  The “net sale” would amount to 10 pence and the VAT on the sale would amount to 2 pence.  The retailer, assuming he/ she is VAT registered, MUST charge VAT  on the full amount charged to the customer (provided the charge is greater than 5 pence per bag).

The amount payable to The Department of the Environment is still 5 pence.

In this instance the “sale” is deemed to be “within the scope of VAT”.

The retailer MUST charge VAT on the full amount of the proceeds of each bag sold.

 

The Net Sales entry on their VAT return (Vat Return Box 6).  The retailer needs to include the net proceeds generated from sale of bags in their routine VAT returns.  In the above example that would equate to 10 pence for each bag sold during the VAT return period.

 

The VAT due in this Period (Vat Return box 1).  The retailer needs to include the VAT liability arising on the sale of the bags in their routine VAT returns.  In the above example that would equate to 2 pence for each bag sold during the VAT return period.

 

The retailer can reclaim an input VAT incurred on the purchase of the carrier bags as normal.

 

Single Use Carrier Bag quarterly returns – please see our first article in this series where we discussed the information to be included in the quarterly returns to The Department of Environment. https://jsrcharteredaccountants.com/single-use-carrier-bag-charge

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Single Use Carrier Bag Charge – VAT implications

Vat implications of Northern Ireland’s Single Use Carrier Bags Levy

 

On Monday 8th April 2013 the Single Use Carrier Bag Levy came into force.

 

The VAT treatment of the Single Use Carrier Bag Levy in Northern Ireland differs from how it is currently treated in Wales.

 

Practical Implications for a VAT Registered retailer operating in Northern Ireland:

If a retailer charges the minimum allowable charge of 5 pence per single use carrier bag, then the sale is classified as being … “Outside of the scope of VAT”, and as such:

  • The retailer doesn’t charge the customer any VAT on the 5 pence charge for each bag.
  • The retailer does not include the 5 pence proceeds generated from each carrier bag in the Net Sales entry on their VAT return (Vat Return Box 6)
  • The retailer does not include any VAT liability on the 5 pence proceeds generated from carrier bags within VAT due in this Period (Vat Return box 1).
  • The retailer may reclaim any input vat incurred on the initial purchase of these carrier bags.

 

In our next article we’ll take a quick look at the VAT implications of charging more than the minimum 5 pence per bag.

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The Modern Accountant ????

But Accountants DO NOT blog……

 

This may well be true, yet here we are, accountants, and we are trying our hand at blogging!!

 

It has become a general consensus that accountants are not known for trying out new ideas, and as for social media and blogging well, they simply ‘do not have the time’, it is ‘not necessary’, it ‘will not increase our profits’, it ‘will not add to the quality of service for our clients’ and it is ‘not an efficient use of our time.’

 

While this is all true, and ok, it probably won’t help us understand our clients better, it is most likely not very proactive, and lets be honest, who NEEDS an accountant that blogs?? However, despite all this, and in a bold NEW approach, I have pondered over the last few months that maybe our clients would like to understand US a bit better!!!!

 

I personally have always felt, even way back in my training years, (which feels like a million years ago now but really is not!!!) that it is important to show our clients that there is an ordinary human being behind all the ‘serious’ chat, tax regulations and number crunching. Maybe even someone that dare I say it has a ‘personality of sorts’!!!

 

So based on all this and with a gentle push and encouragement from some of our twitter friends Helen Cousins (@xcelbusiness), Sian Phillips (@_sians) and Sage Ireland (@sageireland) we are going to attempt this blogging thing!!!

 

This is my first ‘introductory’ blog and I hope you will all bear with me as I try to ‘master’ this over the coming weeks.

 

For now i have listed below some of our earlier posts that we included previously. A couple of them were in response to a few past client queries, which actually did end up being ‘a proactive use of our time!’

 

In the mean time if you have any interest in a specific topic you would like to see more information on please feel free to get in touch with us!!

 

and we have social networks too……

 

Follow us on twitter:  @stacielross

Like us on facebook: JSR Chartered Accountants

connect with us on linkedIn: JSR Chartered Accountants

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VAT Flat Rate Scheme – A Closer Look

Background:

The Flat Rate Scheme for VAT is a scheme specifically
designed by HMR&C to reduce the administrative burden on smaller VAT
registered businesses.  The scheme is
restricted to business whose turnover does not exceed a specified
threshold.  The scheme also excludes
businesses for a number of other reasons such as if the business has recently
been charged certain VAT penalties.

 

Application:

Under the Flat Rate Scheme the registered business charges
VAT at the standard rate/ applicable rate for the sale, however when it comes
to paying over the VAT liability to HMR&C the registered business
calculates its VAT liability at a specified “flat rate” based on the level of
sales.  The “flat rate” is a
pre-determined percentage that is list out by HMR&C, this flat rate varies
from trading activity, see the current table of rates at Appendix 1 below
(taken from www.hmrc.gov.uk ).

 

If your business operates within several of the business
areas listed it is necessary to select one rate, and this must be the rate that
best reflects the main or core business activity i.e. the area of your trading
activity that generates the greatest turnover.
This “flat rate” percentage would be applied to your total turnover.

 

The only VAT on acquisitions that can be recovered while a
business is registered under the Flat Rate Scheme is on capital additions
costing more that £2,000.

Turnover Thresholds for Registration:

A business can apply to register for the Flat Rate Scheme
provided the annual turnover is not expected to exceed £150,000 excluding
VAT.  Once your business is registered
on the Flat Rate Scheme the turnover excluding VAT can rise to more than
£230,000

First Year VAT Registration?

By way of a further incentive if in your first year of VAT
registration you enter the Flat Rate scheme then your business can benefit from
a 1% reduction to the appropriate flat rate.
This ‘introductory offer’ from HMR&C applies until the day before
the anniversary of your VAT registration, after which time you will be required
to revert to the standard Flat Rate for your business sector.

 

Record Keeping

It is essential that you keep a record of the calculations
to support your workings for each vat return and how your vat liability has
been arrived at.  You should as a
minimum keep a record of the sales applicable for the vat period, the “flat
rate” percentage you are applying and the resultant vat liability.

 

 

 

 

 

Appendix 1

Flat Rate Scheme percentage rates from 4 January 2011

These rates will apply from 4 January 2011 until further
notice.

Category of business Appropriate percentage
Accountancy
or book-keeping		 14.5
Advertising 11
Agricultural
services		 11
Any
other activity not listed elsewhere		 12
Architect,
civil and structural engineer or surveyor		 14.5
Boarding
or care of animals		 12
Business
services that are not listed elsewhere		 12
Catering
services including restaurants and takeaways		 12.5
Computer
and IT consultancy or data processing		 14.5
Computer
repair services		 10.5
Dealing
in waste or scrap		 10.5
Entertainment
or journalism		 12.5
Estate
agency or property management services		 12
Farming
or agriculture that is not listed elsewhere		 6.5
Film,
radio, television or video production		 13
Financial
services		 13.5
Forestry
or fishing		 10.5
General
building or construction services*		 9.5
Hairdressing
or other beauty treatment services		 13
Hiring
or renting goods		 9.5
Hotel
or accommodation		 10.5
Investigation
or security		 12
Labour-only
building or construction services*		 14.5
Laundry
or dry-cleaning services		 12
Lawyer
or legal services		 14.5
Library,
archive, museum or other cultural activity		 9.5
Management
consultancy		 14
Manufacturing
fabricated metal products		 10.5
Manufacturing
food		 9
Manufacturing
that is not listed elsewhere		 9.5
Manufacturing
yarn, textiles or clothing		 9
Membership
organisation		 8
Mining
or quarrying		 10
Packaging 9
Photography 11
Post
offices		 5
Printing 8.5
Publishing 11
Pubs 6.5
Real
estate activity not listed elsewhere		 14
Repairing
personal or household goods		 10
Repairing
vehicles		 8.5
Retailing
food, confectionary, tobacco, newspapers or children’s clothing		 4
Retailing
pharmaceuticals, medical goods, cosmetics or toiletries		 8
Retailing
that is not listed elsewhere		 7.5
Retailing
vehicles or fuel		 6.5
Secretarial
services		 13
Social
work		 11
Sport
or recreation		 8.5
Transport
or storage, including couriers, freight, removals and taxis		 10
Travel
agency		 10.5
Veterinary
medicine		 11
Wholesaling
agricultural products		 8
Wholesaling
food		 7.5
Wholesaling
that is not listed elsewhere		 8.5

 

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