Keep a record of all transactions.
Sales turnover is the amount the business earns before deducting business expenses including receipts of any kind for goods sold or work done such as commission, tips, payments in kind, fees and insurance proceeds. Sales of fixed assets are excluded from sales turnover as are Business Start up grants which are entered in a different section of the self assessment tax return. DIY Accounting produce excel spreadsheets to record the sales income and bank receipts. Check the amounts deposited do not exceed the declared turnover which would indicate that you have understated your sales and your tax liability would at the least be increased unless you could provide a solid reason for the anomaly.

Ensure financial, purchase and sales records are compatible.
Compatibility will vary from business to business. Examples if you post 100 EBay items your records should show 100 items of income and 100 items of postage. Buy food for a restaurant for resale at four times cost, some wastage is inevitable but the underlying compatibility between sales generated and purchases should be reasonable. The average number of meals sold from a take-away shop should be compatible with the number of take-away cartons purchased. A taxi driver should not claim fuel receipts during his holiday period and the fuel bills should be compatible with the fares obtained. Unusual and incompatible expenditure declared on the self assessment tax return can and do trigger Inland Revenue enquiries. Many Inland Revenue enquiries result in a higher tax liability due to the scrupulous professional way in which compliance investigations are carried out.

Obtain receipts for everything.
Tax payers lose millions each year by not obtaining or retaining receipts for expenses. If you are claiming fuel costs for a business trip and fill up with £50 of petrol get a receipt. The tax saved by including that receipt in your accounts is £11 at basic tax rates and £20 at higher tax rates, never mind the possible vat reclaims. If your business turnover is over the vat threshold of £64,000 p.a. for 2007-08 the receipt is worth even more. £16.81 vat and income tax at basic tax rate and £24.47 at the higher income tax rate. The same is true for all other business receipts. Obtain a receipt for everything. If you lose a receipt then still include that expenditure in your accounting records but if your tax return is inquired into by the Inland Revenue that expenditure may be disallowed unless you can argue and sometimes prove the expense was in fact incurred. May help to note in your records - receipt lost.

Do not mix business and personal.
The general rule is that items solely for business use can be claimed for tax purposes and the business proportion of personal expenditure may be allowed although the rules are applied quite strictly. If you purchase both business and personal items from a supplier the business expenses only can be claimed but if you obtained all the items on a single receipt you would be disallowed the cost of that journey as it was not solely for business purposes.

Claim business expenses incurred prior to trading.
Business expenses incurred up to seven years prior to trading actually commencing can be deducted from business turnover if these expenses were solely for the future business purposes. Enter such expenses in your accounting records as if they had been incurred on the first day of trading but show the actual purchase date.

Claim home costs if you work from home.
If part of your home is identifiable as solely for business purposes then home costs can be claimed. The cost allowed is the proportion of the total area of the home the business area occupies. For example, excluding shared facilities of kitchen and toilet if the home has three bedrooms, living and dining room and one bedroom is used solely as an office then 1/5 of home costs could be claimed. The home costs to claim would be heat and light, insurance, general and water rates and mortgage interest excluding repayment amounts. Where mortgage interest is claimed the revenue might also claim as a capital gain the increase in value of that proportion of the home, such Capital Gains Tax being subject to tapering relief over time. It may be safer not to claim mortgage interest as part of the home costs.

Take care if claiming a partner’s wages against profits.
Partner’s wages can be deducted as a business expense although there are rules which would be applied in such circumstances to ensure the amount paid is both real and reasonable. The business would need to operate a PAYE scheme for the partners’ wages, deducting income tax and national insurance, perhaps using a package such as DIY Accounting have available using Payroll Software to produce all the statutory requirements. The work carried out must be real not invented and the rate paid reasonable for the nature of the work and the time spent. Evidence may also be required that the partners’ wages were actually physically paid to that partner, for example in the form of a cheque.

Claim vehicle costs or mileage allowances.
Vehicle running costs and expenses such as fuel, excise duty, insurance, repairs and breakdown membership may be claimed as business expenses if the vehicle is used solely for business purposes. Travel from home to work is not business use and disallowed. The proportion of vehicle running costs and capital allowances which are claimable are dependent upon the proportion the vehicle is used for business and personal use. Parking fees for business purposes may be claimed. Parking fines and penalties for motoring expenses are not claimable as business expenses for tax purposes.

An alternative to claiming vehicle running costs and vehicle capital allowances would be to claim mileage allowances which at the time of writing are 40p for the first 10,000 miles and 25p per mile thereafter.

Write off expenditure against taxable profit unless the item is a fixed asset.
Depreciation is not allowed and replaced by Capital Allowances for the purposes of calculating the tax payable. Capital allowances are designed to write off the cost of purchasing a fixed asset over the life of the asset rather than in the financial year in which it was purchased thereby spreading the tax relief on the asset over those years. Many assets purchased by small businesses fall into a grey area as whether they are fixed assets or normal business expenses. Generally a fixed asset would be defined as an item that would be used by the business over several years and usually of significant value. 100% tax relief is obtained on items purchased which are not fixed assets.

Avoid fines and penalties by submitting tax returns on time.
Accounting records and Self assessment tax returns should be prepared well in advance of the first submission date of 30th September to enable the information to be checked and verified before submission to ensure all possible claimable expenses have been included. The final deadline for submission is 31st January with late returns and payments being subject to penalty fines and interest payments which should be avoided.

VAT compliance on an International basis can be a complicated thing to deal with, since VAT on certain things might be higher or lower than others. In some countries, VAT is charged on food, while in others it is not. Do you know which category your home country falls under? Do you know how to properly apply VAT to your sales charges? Do you know exactly what to do with the VAT that you collect?

VAT is meant to go to the government to help provide services and to help to fund the running of that government. Tax laws dictate how much to apply to what, and where to send it. If you are not fully versed in these laws, however, you might find yourself liable for a mistake that you never realised you were making.

The alternative is to seek Cross Border tax counsel from a person or company who knows the business. Everyone has to be VAT compliant, and the rules and regulations for specific locations can vary with time or with the exact items that you are selling. Tax professionals devote their time to researching and studying these laws to make sure that your company complies with all necessary tax laws.

VAT compliance is very important to any company because without it you are subject to persecution from your government. Fines are imposed, and in bad cases prison sentences might even be issued for noncompliance with current tax laws and VAT procedures. There is no reason to find yourself in trouble or in over your head. If you are unsure of VAT law, contact a professional with all alacrity to keep yourself perfectly compliant with VAT tax laws for your country.

Planning ahead and teaming up with someone who is up to date on VAT tax laws will help you to remain in a profitable and fully legal position at home and abroad. That is only one of the reasons that it is so important to be sure of your company’s VAT compliance.

Reclaiming foreign vat is not a problem, generally, it seems that most companies either don’t think it is worth while or don’t know that they can. It has been estimated that around 80% of foreign VAT remains unclaimed. that is a huge amount going to revenue services throughout the European Union that should not.

Does your company ever attend or exhibit at trade shows? As we all know these can be expensive events thought they are mostly worth while in two regards: knowing what is happening within ones own industry, and gaining more clients who attend the shows.

The cost of stands at shows carry VAT, this VAT can be reclaimed. Why most of this VAT is not reclaimed remains a mystery, but a couple of guesses may throw some light on the issue.

Many companies and exhibitors are just not aware that they can. Many provide their VAT number before the show for invoicing purposes but the invoice still shows the VAT. One of the problems here is that it is the marketing arm of many companies that pays for and arranges these shows, marketing or sales are not as aware of VAT issues as the accounting departments.

The second and often cited problem is the paper work involved in reclaiming VAT, and yes it is sometimes onerous. Many companies now solve this burden by out-sourcing the VAT reclamation process to companies who specialize in that area.

For more information on reclaiming VAT see our main website.

Part of Finance Minister Brian Cowen’s 2008 budget speech, is to simplify the rules for VAT on property, while ensuring more equitable treatment for taxpayers. The new rules are designed to be broadly revenue neutral.

In Europe on the doors of many shops is possible to see a badge “tax-free for tourists”. It means that having done shopping in such a shop, you can essentially save money. The system of “tax-free shopping ” (TFS) is based on that in the European Union exist established rule: if you constantly live outside of the European Union, leaving EU, you can wholly receive back the sum of the tax on added cost (VAT), which you have paid at purchasing of the goods.

The procedure of VAT refund is extremely simple. At purchasing of the goods in TFS shops the special check has to be given to you, at departure from the country the stamp of customs house has to be put on it, and then you can receive money by this check. To use TFS system is necessary to know some details.

The requirements at fulfillment of purchase

At purchase in shop of TFS system ask the seller to fill in the special check - Tax Free Shopping Cheque. Look carefully after, that the seller has entered your surname, name and address correct in the check, as it is in your passport. You can, naturally, to fill it in by yourself. In the check also have to be written down: the sum of purchase, the sum of the paid VAT and the sum of refund (that is VAT minus the commission), which you should receive at departure from EU. It is necessary to know that the VAT and the commission in the different EU countries are various. In the whole the sum of refund vary from 10 % up to 19 % from the price of purchase.

You should know that in a number of EU countries to receive the right on VAT refund is necessary to buy the goods for the certain sum in TFS shop. The different shops also have specificity: in some shops is necessary to do shopping for the certain sum in all departments, in others - only in one department (for example, video recorder and video tapes, but not a video and costume). Remember it, as well as that sometimes sellers prefer to not contact with tax-free system, even if their shops are included in it. In this case you instead of the tax-free check can be offered the additional discount approximately for the same sum. Agree, all is the same for you, isn?t it?

Formalities at passage of customs house

At departure you should show to the custom officer tax-free check, passport and goods. In some EU countries is necessary to present the commodity check as well. If you pass through the several EU countries you should show tax-free checks and acquired goods, to receive a custom house stamp for the subsequent VAT refund, in the last country on your way.

In some countries, for example, in Holland and Sweden, works one more restrictive rule: the stamp of customs house should be imprinted on not later than 30 days from the date of purchase. In Germany and Sweden the stamp is put only in the case when the goods were not used - it should be sealed. All these rules are necessary to know beforehand.

The procedure of refund

When the custom house stamp is on your tax-free checks, you are directed to the special VAT refund office at the International Airport. In some countries these offices are placed behind the passport control boundary, therefore money can be received already passing on embarkation. And in those countries, where VAT refund office is located in a concourse, you can remain without money, if you remember about them when you checked in already ? you are not allowed to return back to a concourse. Therefore you had better to learn about VAT refund office location beforehand.

But there is no problem, if you had no time to receive your money at the airport. You can make it in any other VAT refund office - their network covers entire world.

Whether is possible to get the VAT refund without tax-free check?

It is possible, but under one condition - if you are going to return to the country, where have got the goods. So, in Holland you can get the VAT refund, having made purchase in any shop even if it is not included in TFS system. You buy the goods, then take them out of EU and imprint a customs house stamp on the usual commodity check. Procedure and restrictions are the same: show the check, passport and goods, the stamp of customs house should be put on the check not later than 30 days after purchase of the goods. Then, when in any time you again come to Holland (or in other EU country), you or your close confidant goes in shop, where the goods were bought, and receive there all sum of the VAT without a deduction of the commission. Compare: by special tax-free check at departure from Holland you receive 10 % from cost of the goods, and in shop - 17 %. The procedure is known enough and spread. The experienced people advice: buying the goods, you had better to agree with the manager of shop beforehand upon the later opportunity to get the VAT refund in such a way. Then certainly everything will be in order.

Tax-free and duty-free

If you went abroad, at the airports for certain you saw shops and booths under the badge “duty-free”. (”Tax-free” and “duty-free” is the same). The duty-free trade is organized also in planes making the international flights, on ferries plying between two countries, on cruise ships. The prices of goods are lower here, than in usual shops. Besides that, what is significant and important, the duty-free shops are open not only for the foreigners, but also for the citizens of the country who leaving abroad. The main thing - that the goods shouldn?t be imported back into the same country. Therefore at the airport you can get the goods only by presentation of the ticket on departure from the country.

It has been proposed that from April 1st 2010 there will be two charges of VAT on goods and services in India.  Currently in most European countries businesses collect and pay VAT only to one source and many companies find VAT accounting onerous already, especially small businesses.

But imagine collecting two different VAT rates on all your goods and services and then paying or reclaiming VAT to two different VAT authorities. Additionally companies will have to deal with the problem of different regions being able to set their own VAT rates.  For example if you had a company based in Dublin and did some business with another company based in Cork, you could have a different VAT rate to try and claim a refund for.

The Indian proposal makes European Vat policy look timid, even though we have many different Vat rates for the same goods and services through out the EU.  However this is the area in which Global Tax Reclaim excel.  GTR reclaim Vat from all the European countries on behalf of clients world wide.

We make reclaiming over-payments in Vat easy - so contact us today on 00353 1458 7460

If you or your company does business in Europe, you should be aware that you are entitled to reclaim the VAT charged on certain services you incur. These services include employee travel and relocation costs, vendor expenses like inter company charges, exhibition and marketing costs, telephone and communication charges, and the costs involved in running representative offices. The problem is that reclaiming this VAT can be a frustrating experience owing to bureaucratic hurdles and language problems. Fortunately, you can put the whole affair into the hands of a specialist firm that can take care of the whole procedure for you. Here are some great reasons you should entrust your VAT refund job to a specialist firm.

Firstly, reclaiming VAT is an onerous and time-consuming process. There are language difficulties and each country has its own system and policies. A specialist firm has the expertise and experience to deal with each country.

Consider what each application entails. Firstly, you need to prepare applications in accordance with the VAT refund law of the relevant country. These generally have to be in the primary language of the country. These applications then need to be filed to the right department and at the right time. The VAT refund procedure then needs to be monitored and perhaps followed-up to ensure the application is going through the system. Perhaps there’ll be queries from the involved departments. These, of course, will be made in the language of the country involved. And possibly appeals will have to be made or extra documents submitted.

Also, a specialist firm will have the expertise and experience in VAT reclamation to get the maximum refund possible. These sums can be substantial. While VAT is meant to be a tax imposed on final consumers, it can prove a burden to firms who don’t reclaim their foreign VAT. This burden can comprise up to 20% of their foreign costs depending on the VAT rates in the country they operate. For example, recoverable VAT makes up 19.6% in France, 17.5% in the UK and 19% in Germany.

Another advantage of employing a specialist firm to process you foreign VAT refunds is that you don’t need to utilise any of your own staff or facilities. This allows your staff to work totally on tasks that are profitable for your company.

So if you’ve decided to look into getting a VAT refund, first check you can do it in time. If you plan to make a claim, you need to do it within 6 months from the end of the year in which the expense was incurred. Belgium and The Netherlands are exceptions. In these countries, claims can go back as far as three and five years respectively. Then look for a firm with a proven track record in getting VAT refunds to handle the whole procedure for you. Reputable companies operate on a ‘No Vat Refund - No Fee basis’. Generally, you just have supply the original invoice for the firm to get to work. Then just get on with your business and wait for your VAT refund to arrive.

Vat or goods and services tax (GST), is tax on exchanges. It is levied on the added value that results from each exchange. It differs from a sales tax because a sales tax is levied on the total value of the exchange. For this reason, a VAT is neutral with respect to the number of passages that there are between the producer and the final consumer.

VAT is an indirect tax, in that the tax is collected from someone other than the person who actually bears the cost of the tax (namely the seller rather than the consumer). To avoid double taxation on final consumption, exports (which by definition, are consumed abroad) are usually not subject to VAT and VAT charged under such circumstances is usually refundable.

And that is where Global Tax Reclaim come in, we specialise in reclaiming Vat on behalf of companies world wide.  Therefore if your company has paid any VAT within the European Union call us - we can help.