I just got a VAT registered client. Its a corner shop selling newspapers, spirits, tin food and other grocery items. I am going to do their very first VAT return. Can any one guide me whats the standard way of doing VAT return for corner shops?
I have a few clients who run newsagents and corner shops, and all of them account for VAT using the cash accounting scheme (i.e. pay/reclaim vat on actual receipt/payment of vat).
What I do is to obtain the till receipts and then summarise the cash taken each day for the quarter. I then work out the vat due on this amount at 17.5%. This gives you the output vat due.
I then summarise the expenses paid via the bank and work out what vat is reclaimable. If they put through petrol receipts and you claim the VAT on these, and they also use the car for private use as well as business, you will need to make an adjustment for the fuel scale charge. You may also need to make adjustments for private telephone usage etc. This will then give you the input vat due.
I then take the input vat away from the output vat and this gives me the amount of vat due to HMRC, or reclaimable from HMRC.
Thanks for your response. If the till is old one, which is not computerised to show the sales in different heads, what is the standard way of differentiating between standard rated and zero rated saes.
You only need to account for the VAT scale charge if your client has a business vehicle, uses it for some personal trips and also reclaims VAT on petrol expenses. You can find out the relevant rates from the HMRC website www.hmrc.gov.uk. Basically you need to credit your vat a/c i.e increase the liability, and debit the expense a/c i.e. motor expenses.
Afraid if the till is not set up to distinguish between zero and standard rated, you will have to separate them out yourself. Normally standard rated sales will be on things such as electronic top-ups, video rentals etc. Zero rated items will be items such as food, newspapers etc. No quick way of getting around this unfortunatley.
