Whether you are a retail business owner or a consumer, you are likely aware of value-added tax (VAT) in some shape or form. It is an important part of a business, which is why Eurostop is providing some insight about how it’s implemented, used for transactions and how POS systems can keep track of collected VAT to help businesses remain in compliance.
What Exactly is VAT?
As mentioned above, VAT stands for value-added tax. In the simplest of terms, it is what a retailer/business is required by law to charge for a consumer’s consumption of the supposed value of goods and services they supply. Although it might not seem like much of a benefit to retailers or businesses, there are some advantages to being VAT-registered in the UK that include refunds on all VAT-taxable items purchased by your business. Additionally, once you are VAT-registered, you will be given a registration number that can help improve your credibility if you own a smaller business. Last but certainly not least, retailers and other businesses that are VAT-registered are often allowed to reclaim up to four years’ worth of past VAT charges, as long as they still have proof of purchase.
Is VAT Applied to all Products?
There are a variety of goods and services that are exempt from VAT such as insurance, training and fundraising events by charities. Alternatively, goods or services will be taxable at the standard rate, a reduced rate or they may be zero-rated.
For both VAT exempt and zero-rated items VAT is not added to the selling price and consumers are not required to pay any VAT on the item; but for the seller there is an important distinction between these two classifications. For zero-rated items, the seller may claim be able to claim VAT back from the HMRC that is incurred in relation to providing the supplies. Sellers should however be aware that certain conditions must be met in order for products to be zero-rated and these should be considered carefully.
You can apply to be a VAT exempt business if you only sell or supply VAT exempt goods or services. In this case you cannot register for VAT or recover VAT on purchases. You may also apply to be VAT exempt if you sell only zero-rated items, but if you are exempt from registration, again you will not be able to reclaim any VAT.
Are Consumers Provided with VAT Receipts?
When a patron of your business or retail establishment purchases your goods/services and you’re a VAT-registered business, then you will provide them with a VAT receipt afterward. Not only will it include information such as when the purchase was made and at what brick-and-mortar location if the item was purchased in person, but it will also contain your company’s registered VAT number as well as the amount of tax charged for that individual purchase. VAT receipts issued by POS systems can come in paper or increasingly in digital format.
Although for consumers, VAT receipts are not vital unless they are purchasing products for their own business from a B2B company, they are important for businesses, especially when they need to invoice their suppliers. This is because they will need a valid VAT receipt in order to claim such write-offs on their taxes. Without a receipt, you cannot claim a VAT purchase as a business owner.
What Exactly Does a VAT Receipt Include?
As briefly mentioned above, a business’s VAT number, the amount of VAT taken out of a purchase, and the time a purchase was made are included on a VAT receipt. However, it will also include a unique invoice number, important information about the business that issued the receipt such as location and address, and the tax date. Unfortunately, if any of the information included on such a receipt is incorrect the VAT could be rejected, meaning you will be unable to claim it in your VAT return. That’s why having payment processing solutions like a VAT receipt POS system is essential for every business nowadays.
What are the Legal Implications Surrounding VAT?
One of the most important legal ramifications in the UK surrounding VAT is that any VAT-registered business is required by law to employ a VAT receipt POS system to provide consumers with the proper receipt. Additionally, any supplier that fails to provide a detailed VAT receipt is required by law to provide one, and all customers are entitled to one. In addition to these regulations, VAT-registered businesses are also legally obligated to keep detailed records of their transactions and purchases dating back to six years; such records also required to be in good condition and easily accessible.
Contact us for VAT receipt POS system solutions today
To remain in compliance with all UK VAT regulations, Eurostop can help. Our modern retail software are designed to be easy to use and can integrate with all of today’s latest CRM and ERP solutions.
In addition to VAT receipt POS solutions, Eurostop also specialises in a range of offerings to help streamline your retail establishment and enhance oversight such as mPOS systems, fiscalisation services, and more.
Contact us online today or call +44 (0) 208 991 2700 for a no-obligation demonstration.
