Are you still struggling to grasp when you can claim input tax?
As a result, you may be missing your chance to claim all the input tax due to you!
You can put a stop to this by understanding the general rules and tips that apply to input tax so you can use it to boost your company's cash flow.
Follow these rules when it comes to claiming your company's input tax
Input tax general rule #1: If you've claimed input tax on a tax invoice and you haven't paid your supplier within 12 months of the date of that invoice, you have to 'add back' the input tax. 'You will have to include that specific Vat amount as output tax in block 12 of the relevant Vat return,' says the Practical Vat Loose Leaf Service.
Input tax general rule #2: You can claim input tax on any item you purchase or any expense you have, as long as it's used in the course of your Vat registered business. For you to claim, your suppliers must have been charged Vat on the transaction.
Input tax general rule #3: If you discover you haven't claimed Vat back on some back invoices, you can still do so but it must be within five years of the date of that invoice.
Input tax general rule #4: You can claim input tax on second-hand goods you buy for your business. This is known as notional input tax. 'You will, however, need to keep a record of the details of the person who sold the goods to you, a description of the goods and the amount you paid for it. The Vat 264 declaration takes the place of a tax invoice,' explains the Loose Leaf.
Following these general rules when it comes to claiming your company's input tax will ensure you know how to apply them to boost your company's cash flow.