It’s important to keep on top of your VAT records as it is a legal requirement for VAT-registered businesses to:
- Keep records of sales and purchases
- Keep a separate summary of VAT called a VAT account
- Issue correct VAT invoices
Your Countingup app can automatically track the VAT impact on every transaction you make – from payments to sales invoices and bills. If you are a VAT registered business, simply make sure you’ve updated your VAT status in the app.
All you need to do is check that the VAT records are correct. It is simple to make changes in the app.
Your VAT records are a combination of VAT treatment, VAT rate and VAT amount.
- The ‘VAT treatment’ determines how a transaction impacts your VAT return.
- The ‘VAT rate’ enables us to calculate the VAT amount associated with the transaction and further informs your VAT return.
- The ‘VAT amount’ is the VAT value in pounds associated with the transaction.
The VAT treatment is based on:
- The type of items you’re trading: goods or services
- If you’re selling or buying
- If you’re selling, where your customer is based and if you’re buying, where your supplier is based: UK, EU or outside of the EU
The VAT rates depend on a number of factors unique to the business trading. You can find HMRC guidelines on VAT rates here.
To mitigate errors we have only provided the possible VAT rates for each VAT treatment as per the tables below. For example ‘goods’ cannot be exempt so we don’t show these rates when you select a VAT treatment with ‘goods’.
For incoming transactions:
| VAT rate | ||||
|
VAT Treatments |
20% |
5% |
0% |
Exempt |
|
Goods or services to UK customer |
Yes |
Yes |
Yes |
Yes |
|
Goods to EU customer |
Yes |
Yes |
Yes |
No |
|
Services to EU customer |
Yes |
Yes |
Yes |
Yes |
|
Goods to a customer outside EU |
Yes |
Yes |
Yes |
No |
|
Services to a customer outside EU |
Yes |
Yes |
Yes |
Yes |
For outgoing transactions:
| VAT rate | |||||
|
VAT Treatments |
20% |
5% |
0% |
Manual |
Exempt |
|
Goods or services from UK supplier |
Yes |
Yes |
Yes |
Yes |
Yes |
For outgoing transactions:
| VAT rate | |||||
|
VAT treatments |
0% |
0% (20% reverse charge) |
No VAT 20% import |
No VAT 5% import |
No VAT 0% import |
|
Goods from a supplier outside EU |
No |
No |
Yes |
Yes |
Yes |
|
Services from a supplier outside EU |
Yes |
Yes |
No |
No |
No |
|
Goods from EU supplier |
No |
No |
Yes |
Yes |
Yes |
|
Services from EU supplier |
Yes |
Yes |
No |
No |
No |
If you work in the hospitality, holiday accommodation, and attractions industries you can apply a 12.5% VAT rate to applicable expenses, from 1 October 2021 until 31 March 2022. Find more information here.
Keeping track of accurate VAT records in the Countingup app enables you to view how much VAT you owe to HMRC or can claim back from HMRC.