Our client in the luxury travel industry, provides passenger transport in vehicles designed or adapted to carry 10 or more passengers. Because the supply of passenger transport services are zero-rated VAT which meant customers weren’t being charged VAT, the company mistakenly believed they didn’t need to be VAT registered.
The business was not yet VAT registered, this is compulsory if a business’s annual turnover is £82,000 (this limit changes annually). If turn over exceeds this amount then a business must charge VAT on its sales. This also applied if your business made a one-off sale bringing your annual turnover past the threshold.
The company became VAT registered which did not increase the prices charged to customers but enabled VAT to be recovered on overheads. The most significant of these were the purchase of new vehicles and fuel for the business. We identified the issue and arranged a retrospective VAT registration for the business and successfully argued that penalties and interest for late registration were not appropriate, this was an important gain for the business financially. We worked closely with the company’s existing bookkeeper to accurately quantify the historic claim.
Through working with the team, the business secured a repayment from HMRC of £29,700. The business now has the on-going benefit of reclaiming VAT from HMRC on a quarterly basis. We worked closely with our client and their accountant to see these great results, which ensured that the business would be financially stable for the future.
Talk to us today if you need help with your business’ VAT, it’s a complicated subject and our team can assist.