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Payment to Supplier Not Registered for VAT - GB

Marsha Galicia avatar
Written by Marsha Galicia
Updated over a month ago

XBert Type: Standard
Accounting Software: Xero, MYOB, QuickBooks
Country Restriction: GB only
Risk Type: Tax Risk
Business Function: Purchases

Overview

This XBert identifies payments made to suppliers who are not registered for VAT, ensuring that your business does not incorrectly claim VAT credits.​

What it does

XBert scans your accounts payable and bank transactions to detect payments where VAT has been paid to suppliers who are not VAT registered.​

How it works

XBert performs the following checks:​

  • Identifies suppliers matched to Companies House that are active in Xero but have a VAT status of not active.​

  • Analyzes payments to these suppliers within the past year where VAT has been paid.​

  • Flags any instances where the total VAT paid to a non-registered supplier is £10 or more.​

This helps prevent your business from claiming VAT credits on payments that are not eligible, avoiding potential penalties from HMRC.​

Example/Use Case

Your business has dealt with a supplier for the last five years. Over the past year, the supplier is no longer VAT registered, but your business continues to pay VAT and expects to claim this back on your VAT Return. Instead, HMRC sends an invoice for the incorrectly claimed VAT credits, and your business must chase the supplier for a refund, impacting your cash flow.​

Accounting software

XBert integrates with:​

Which countries it supports

United Kingdom only.​

Processes

This XBert falls under the Purchases (AP) category.​

To action:

  1. Confirm the supplier's contact records are correct.​

  2. Check the supplier's VAT status using the UK VAT number checker.​

  3. Update the supplier's financial details and tax rate in your accounting software to reflect their VAT status.​

  4. Request revised invoices exclusive of VAT if necessary.​

  5. Ensure that VAT amounts paid to non-registered suppliers are not claimed in your VAT returns.​

By taking these steps, you can maintain accurate VAT records and avoid potential issues with HMRC.​

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