I'm completing our VAT return. Can you help with a query on box 7?

Question

Is council tax outside the scope (so should be excluded from box 7)? I suspect it is - but our ledger currently shows it as zero-rated. Who's right? Any help would be much appreciated.

Thanks

Answer 1

Council Tax should not be included in box 7 as it is not considered a purchase for VAT purposes.  It is not zero-rated either, it is determined as outside the scope as if it was taxable then it would attract tax on tax - if that makes sense?  It is a tax in its own right so therefore is outside the scope.  Be careful what you include in box 6/7 as when HMRC input your return it may be read that you are making zero-rated supplies and this may encourage a full VAT audit on your business.

Examples of costs incurred by your business that should not be included in boxes 6/7 include:

VAT itself

wages and salaries

PAYE and National Insurance contributions

money put into and taken out of the business by you

loans, dividends, and gifts of money

insurance claims

Stock Exchange dealings (unless you are a financial institution)

MOT certificates

motor vehicle licence duty

Local Authority rates and

income which is outside the scope of VAT because it is not consideration for a supply.

Figures for inclusion in box 7 should be your total purchases/inputs excluding any VAT. Also include:

imports

acquisitions from EC Member States

“reverse charge” transactions and

special accounting scheme for gold transactions.

If you buy goods under the Margin Schemes, include the full purchase amount.

I hope you find this useful.

If you enter anything in box 9, also include it in the box 7 total

Answer 2

I never claimed VAT on it, always thought it was zero rated.

Answer 3

its zero rated