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--- finances:vat [2026/05/13 10:55] – root
+++ finances:vat [2026/05/13 11:26] (current) – root
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 The government has a fairly good [[https://www.gov.uk/how-vat-works|help page]] on VAT which I'd strongly suggest reading before this guide.
-VAT is a tax which is added on to certain categories of items. You don't need to know these categories, just that some have it and others don't.
+VAT is a tax which is added on to certain categories of items - you don't need to know these categories, just that some have it and others don't.
 If you're not sure if something you're buying has VAT on it then you need to check with the supplier.
 Even if an item would normally have VAT on it, depending on the supplier it may not. (i.e. whether or not the supplier is VAT registered)
+Where we are being charged VAT, the guild will pay this for us. See the below sections on specifically how this works for income and expenditure.
+===== Evidence =====
+Refer to the [[https://www.gov.uk/guidance/record-keeping-for-vat-notice-70021#vat-rules|government guidance]] for full details, but the tldr of what counts as a valid VAT invoice or receipt is that it has details how much VAT was charged and the company VAT number. Generally as long as a receipt or invoice has these details, you're usually good.
+Where you are being charged VAT, the supplier is **required by law** to provide you with a VAT receipt or invoice. Most are fairly good with this and some will even provide VAT receipts as the default. Some you have to ask for it and others will outright refuse to provide it with a range of excuses.
+An example of this is Papa Johns - the receipts they provide to the driver are usually valid VAT receipts but if you forget to ask the driver for this, you usually have to call and push them a little to get it after the fact.
+If a company is not VAT registered then they do not have to provide a VAT receipt or invoice because they don't charge VAT. The duty to provide a VAT invoice only applies where VAT has been charged. If none is charged, then no specific receipt or invoice is required. This also means that even if a company is VAT registered, but haven't charged you VAT (maybe because the items you bought don't incur VAT) then they also don't need to provide you with a VAT invoice or receipt, though most will as a matter of procedure.
+If a company is VAT registered and has charged VAT but refuse to give you a VAT receipt or invoice you need to push back on this. Remind them that they are required to provide you with this and if they continue to refuse you can report them to HMRC. If this happens, avoid this company at all costs. Companies refusing to provide valid VAT records are either incompetent or intentionally dodging the law. Either way - best steer clear.
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 ===== VAT on Income =====
+VAT is automatically taken off any income we make from the Guild website before it hits the account. This means that when memberships are sold on the website for £5, our current account will be credited with £4.17.
+This also applies to any ticket or merch sales we make on the website. It also applies to cash sales except in these cases it's on the committee to properly declare what the cash is from so that the VAT is taken properly. Falsely declaring ticket income as something else to avoid the VAT is fraud - as tempting as it may be to hold onto those extra couple quid, don't do it. Again, this is automatically taken off the total before it hits the account. So if you pay in £120 in cash and declare it as ticket sales, the amount credited to the account will be £100. You can work this out by dividing your total including VAT by 1.2. So 120 divided by 1.2 = 100.
 ===== VAT on Expenses =====
+The reverse concept applies to expenses as it does for income. That is to say, when we buy something that has VAT on, the Guild pays that for us.
+You can use the same calculation as the income section. So if the total cost of something is £120 including VAT, divide that by 1.2 giving £100 which is the amount the society will actually have taken out of the account.
+To make sure the Guild do this, you need to make sure you have a valid VAT receipt or invoice for the expense. If you don't, they pay it for you and the society account will be charged the full amount. Depending on the total of the expense they might catch this for you and ask you for a VAT receipt or invoice, but they also might not so it's important to keep an eye on the statements and make sure that it lines up with what we expect. If you notice that an expense has been processed and we've been charged the full amount and you expected VAT to be taken off then you need to query this with the coordinator as there might be a reason you haven't realised. If it's simply a lack of a VAT invoice or receipt you can get this from the supplier, give it to the Guild, and they can retrospectively give you the VAT money back. An extra safeguard here is including that you expect it to have VAT taken off in the supporting information of the expense. When you do this, it should prompt the Guild to actually check, and query it if they don't think they can take VAT off.