Some areas of retail/online business where VAT opportunities and issues may arise are:
- Discounts/vouchers/promotions: is VAT being accounted for correctly? Opportunities to obtain retrospective VAT refunds and permanently increase margin? Can arrangements be restructured to achieve VAT benefits?
- Goodwill payments/compensation payments/returned goods – can output VAT adjustments be made? Can customer terms be structured to support VAT savings?
- Online sales/click and collect: Is VAT payment deferral possible? Is there an opportunity to use VAT to inject cash into business?
- Zero-rating: are opportunities for zero-rating being maximised (including ‘mixed’ supplies of standard/zero-rated items)
- Delivery charges: is VAT being overpaid on delivery charges?
- Credit card chargebacks: can VAT adjustments be made?
- Bespoke VAT retail scheme: VAT accounting method needs to be agreed with HMRC if turnover exceeds the retail scheme threshold
- Non-UK sale of goods: has overseas VAT compliance been considered? Overseas VAT registrations may be required if the value of sales to consumers in other EU countries exceeds certain thresholds.
- Online services – there are potential issues if you provide services, particularly electronic services, to non-UK consumers.
- Input VAT: opportunities to enhance VAT recovery (e.g. accruals/expenses).
- Commissions (e.g. finance/insurance): Can VAT exemption apply to commissions received?
