It didn't cost me any extra and I'd rather the VAT part of 2.5% of the gross amount I was quite happy to pay for my shopping (which is about .372%) stayed in the private sector than being swiped into Uncle Gordon's wallet.
Yes - I am constantly being reminded at the EPOS that this 2.5% is being deducted but I am paying the same etc. If it wasn't a fiddle certain retailers wouldn't need all these little disclaimers. Am I the only one that feels they are being made think they are lucky to be allowed to shop with certain retailers these days?
Oh and I did work for an organisation associated with UK retailers - and yes I know exactly why the scheme was set up in the first place - a tax avoidance scheme.
It affects small traders - they're at a disadvantage.
In anycase it is an obvious fiddle. It still 'costs' to handle cheques and cash. Cash is quite expensive to handle. But there is no similar scheme if you pay one of these retailers by Cash. So it is the large retailer who is gaining and we, as tax payers, who are loosing out.
The mistake these retailers made was to be too greedy. They should have reduced the cost to those buying using payment other than by credit card. This would have made it clear that the charge was genuine.
It affected me adversely by making my business purchases more complex to record and by reducing my VAT inputs.
Nah - reclaiming VAT inputs is between you and HMC&E (now HMR&C) - nothing to do with the retailer. And HMC&E (now HMR&C) have claimed all along that the "scheme" was invalid, hence they cannot deny you reclaiming the full input VAT (as though the "scheme" hadn't been mentioned by the retailer), now can they?!!
Customs can't have it both ways - they can't claim to the retailer that the scheme isn't invalid, but then *also* claim to the customer (reclaiming input VAT) that it *is* valid!!!
Can't they? Isn't whether he paid them VAT a question of fact? Although HMRC are wanting the retailers to charge more VAT, the fact that they haven't means that he hasn't paid it and cannot therefore reclaim it.
If he gets a VAT invoice which says something like:
then you don't really expect him to enter numbers into his accounts along the lines of
Goods £1000 VAT £175 Total £1175
do you? He cannot reclaim input VAT which he cannot document as having been invoiced. He can only demonstrate having paid £170.62, not £175, unless he falsifies the documents, which is naughty *even if* the "falsification" revalidates something invalid.
E&OE :-) Always check carefully that you haven't said the opposite of what you mean.
The article is not clear about whether the ruling applies only to the future (i.e. clarifying that they must now stop operating the scheme) or whether they have to pay said "lost" VAT in respect of the however many years the scheme has been running.
I suspect that because the law was ambiguous, they are being let off, in which case the answer to your question should be No.
Umm well yes it did really. The company charged the same price for both cash and credit transactions, so if you paid cash you were being overcharged. If you paid credit the company was clipping you for the amount of VAT.
If you run a business it's even more of a PITA since the companies tried to cover up what they were doing by not issuing a valid VAT recceipt at the time of the transaction. For every purchase one had to ask for a VAT receipt and then the split on the bill played hob with accounting packages.
I'd rather not be doing extra work so that fat cat supermarkets can make even more profit.
The customer has paid the same amount, whether the scheme was " Goods 500 VAT 675 Total payable 1175
Now - do you think that HMRC would be happy for the customer to reclaim 675 input VAT? I don't think so - they'd point out that the invoice is incorrect & hence invalid, and so only allow 175 to be reclaimed.
"Ronald Raygun" wrote
Why not? That is what the truth is, according to HMRC! Of course, the customer would have to point out to HMRC that the retailer *refused* to supply a proper & correct VAT invoice...
If what you say were true -- that the customer has only paid 170.62 VAT rather than 175 -- then, if the "scheme" is shown to be invalid then it will be the *CUSTOMERS* who owe the missing money to HMRC, not the retailers!
==================================> "Tim" wrote:
"Ronald Raygun" wrote
Tee hee! And I wrote it correctly first, but then changed it after re-reading before posting!!
Yes, but if what the retailer has actually supplied to the customer is a package consisting of goods and financial services, then the correct proportion of the £X will be less than the usual 14.9% because some of the £X total was for an exempt supply.
What the courts are now saying, I think, is that in future such a supply of finacial service specifically attaching to a sale will not be exempt.
Actually, I do think so, provided the supplier had in fact remitted the £675 to HM coffers. Well, perhaps not. It would be up to the retailer, I suppose, to ask for the erroneous overpayment back, and we couldn't risk HMRC giving a refund at *both* ends, could we!
Nah, the truth is only what you can show in black on white. Quod non est in libris non est in mundo.
The customer would be onto a loser there, since without a proper one, he could not reclaim even the lower VAT amount. :-(
No, I don't think so. If a retailer inadvertently charges a customer too little VAT, it's the retailer's problem, not the customer's. I think the view of HMRC is that in these cirumstances the financial service should not have been exempt, and that the £29.38 credit fee which the customer has paid would be deemed to be £25 + VAT of £4.38, and that the retailer should remit this. I don't think, however, the retailers are being asked to pay this restrospectively for the disputed period, and so what hasn't been remitted cannot be reclaimed.
Are you sure? I was under the impression that they were going for backdated amounts as well?
"Ronald Raygun" wrote
Quick story - at my last VAT inspection, I showed the kind lady inspector some receipts that had the retailer's VAT number, but no split of 'VAT-exclusive amount' and 'VAT amount' (all amounts below c200 each). I asked if that meant I couldn't reclaim the input VAT, to which she said "simply calculate 7 / 47ths of the total, and reclaim that - (assuming the items are VAT-able)".
I know that at least one of the retailers operating the "scheme" being discussed here will, if you say 'No' to "do you want a VAT receipt?", still give you a receipt with their VAT number on it & date etc - just no "split".
Ahem. What proportion of those receipts do you suggest should be reclaimed as input VAT? ;-)
"Ronald Raygun" wrote
But these retailers have charged the *correct* amount, whether-or-not the "scheme" is legal - because they don't change the TOTALs! In other words, if the "schemes" are found to be illegal (and HMRC goes after past amounts), then the customers will actually have already paid the full VAT, and their (earlier) VAT Invoices will be incorrect...
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