Can I reclaim the VAT on this supermarket receipt?
This question came up a couple of days ago in an online networking group, and I've been asked the same thing a few times by bookkeeping clients when they've become VAT-registered. So I thought it might be useful to address it here.
A lot of people will pick up their business supplies such as stationery from supermarkets while they're out and about, but then they're not sure how to treat the VAT when there isn't a breakdown on the receipt, as we all know we need a VAT invoice if we're to reclaim the tax.
If the purchase is less than £250, we can actually reclaim VAT against a simplified receipt, as long as it shows the place of purchase and the VAT number - depending on which store you've bought the goods from, this will either be shown on the main receipt or printed on the back.
So how do we know which items on the receipt are subject to VAT? The supermarkets make that part easy for us by marking the VATable items with either an asterisk or a V.
Let's take this Asda receipt as an example. (Although the same would apply with any other supermarket.) We've bought some paper and document wallets, and all the items have "V" next to them, so VAT has been charged. The VAT number is on the back of the receipt:
Now we need to work out how much VAT has been charged. There are a few ways to do this calculation; the way I find the easiest to remember is to divide the total paid by 1.2 (VAT currently being charged at 20%) to get to the net figure, and then the difference is the VAT charge. So, in this case, we've paid £9.00 and our calculation is as follows:
£9.00 ÷ 1.2 = £7.50 (net amount)
£9.00 - £7.50 = £1.50 (VAT amount)
If you're using accounting software, it will do this calculation for you - look for either a "calc net" button or "exclusive of tax", depending on which software you're using, enter the total amount and then click the button to get the amount of tax that's included in that total.
Make sure you keep a copy of the receipt for your accounting records.