Maximising and improving your academy trust VAT reclaims

The normal VAT recovery rules are that HMRC expects businesses, such as academy trusts, to obtain a purchase invoice from a supplier to recover the input tax it is charged.

The use of charge or credit cards within academy trusts can prove to be very problematic for those working in the finance team. Holders of these cards do not always retain or even obtain a relevant purchase invoice for purchases made over the internet. Instead, documents such as orders are often provided as proof of purchase, but this therefore restricts the trust’s ability to reclaim VAT.

However, what many trusts may not realise is that if purchases are under £250 excluding VAT, a less detailed invoice is required—such as a till receipt, for example. Therefore, if you don’t have a purchase invoice, you may still be able to recover the VAT provided you have sufficient alternative evidence and can satisfy HMRC that the supply took place.

But what do HMRC deem to be sufficient evidence?

Alternative evidence could comprise any of the following documents (although anything that can support the claim can also be included):

• purchase orders; 
• delivery notes;
• records of payment; 
• records of the onward sales of the purchased items; 
• transport invoices/insurance; 
• supplier’s VAT number. 

Furthermore, HMRC guidance states that you can reclaim VAT on supplies made through coin-operated machines without the need to obtain a VAT invoice. These supplies must be below £25, and you must be sure the supplier was registered for VAT, i.e., have a VAT registration number. This would typically apply to:

• phone calls from public or private phones;
• purchases through coin-operated machines;
• car-park charges (on-street parking meters are not subject to VAT);
• a single or return toll charge paid at the tollbooth.

It remains best practice to obtain a valid VAT invoice from your suppliers, but the above information may assist finance teams in recovering VAT on certain purchases where such an invoice has not been provided by the cardholder.

If you want to discuss how you can improve your trust’s internal controls further or require a review, then please get in touch by booking a discovery call today.

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