Local councils often incur VAT on purchases related to non-business activities. To reclaim this VAT, councils not registered for VAT typically use the VAT 126 Report. This report simplifies the process of reclaiming purchase tax on qualifying expenditures.
For councils that are registered for VAT, the VAT 100 form is used to reclaim VAT. While our software is primarily designed to support the VAT 126 method, we also offer a trial version tailored to handle the VAT 100 method. If your council requires this option, please contact us for more information.
For further details on VAT and its application to local councils, please refer to VAT Notice 749 .
For further details on how our process works, follow one the relevent link below
Reclaim VAT using form VAT 126
Reclaim VAT using form VAT 100
It is not the purpose of this guide to advise councils on whether they should register for VAT; this decision rests solely with the council. Nor can we provide guidance or advice on specific VAT claims or concerns. Councils are encouraged to seek professional advice or consult HMRC directly for assistance with VAT-related matters.
However, it is important to note that councils must register for VAT if they make any taxable supplies. Unlike businesses, councils are not subject to a taxable turnover threshold below which registration is unnecessary.
When using the software for the first time, you may need to account for VAT claimed in the previous financial year but not yet received by the start of the new financial year. This can be recorded using the Create Opening VAT Balance feature.