Now more than ever businesses need to grasp the opportunity for growth following the pandemic

Mixed Supply sales and purchases by Opticians and Hearing Aid Companies.

The way Optical Businesses are treated by HMRC is very different from most other retail concerns and failing to respond to the requirements of the sales tax law on partially exempt businesses can have devastating effects on profitability.

Opticians since winning a notable victory against the imposition by the EU and later by HMRC of vat on spectacles and contact lenses have remained in the sights of many local HMRC inspectors.

It used to be considered the effect on tax take for HMRC by checking small businesses made it unrealistic to consider random visits.

Since the formulation of small business HMRC teams that has changed.

Also the nature of optical businesses has also changed since the days when I co-wrote the Full Cost Apportionment Methodology for Opticians with an Ernst & Young Consultant at HMRC headquarters.

Optical practice income has become much more fee based with exempt and apportioned vat levels on the sales. This has a direct effect on the reclaimable vat on exempt and non-attributable purchases as well as affecting the fraction used to calculate whether the partial exemption de minimis level has been broken.

Check list of what you should be doing to reduce vat costs in sales and ensure fullest reclaims of vat on purchases.

 Make sure you account for your sales under the right sales categories.

 Agree and have in writing with HMRC an accurate cost apportionment % for specs and c/ls

 Apply this % to as much as you can, to repairs, weekly/monthly cl sales and account for refunds under the correct category.

 Separate your purchases into exempt, attributable and non-attributable categories. (i.e. what the purchase of the goods or services are used for, not whether they have VAT attached.)

 Calculate your sales split. Fees, apportioned and taxable

 Calculate your de minimis position before every return or purchase of equipment and goods

 Consider ways of purchasing equipment and refits and don’t bunch up lease packages with mixed purchase types

 Plan your purchases across the year to spread vat by leasing.

 Look for leasing plans that provide capital allowance claims. (See Optilease by Snowbird)

Leaving these calculations to your bookkeeper or accountant months after the year end is very risky.

At Eros Business Consulting when we provide an appraisal of an optical business VAT position we check all the above points and reviewing previous sales and purchase accounts take forward where beneficial a new apportionment rate to local HMRC officers.

Often resulting in back payments of overpaid VAT. At the very least our clients gain peace of mind knowing that they are compliant with tax law and have the best deal to work with.

If you have concerns, we can help.

If you have an agreed and up to date apportionment figure for CLs and Specs or jointly we can provide automatic spread sheet ability with the Eros Auto Vatcalculator.

We leave this with all our clients to make life and little easier each return and it also checks your de minimis level automatically.

You can purchase this for your own use and we will apply your current apportionment percentages within the structure. Supplied on line as an Excel Download all you will need to do is to copy in by pasting  your sales figures for the return from your PMS system  as well as your totals of the 3 purchase types from your accounting package.  We recommend Xero but others are available.

Hey presto your return information is displayed on the last work sheet ready to input to HMRC via an api application on excel as well as the auto de minimis check.

The package is available for a one off fee of £250 per practice plus vat usable until vat rates change or your apportionment rates are altered. For a small fee amendments can be made should circumstances change. You can choose either a quarter return or annual return spreadsheet. Mutiple practice groups can choose a programme per branch or can request to have all branches individually itemised for sales purposes with consolidated purchases and one final vat return result.

Composite multi branch sales programmes cost an additional £50 per practice plus an additional set up fee of £150 for 2 – 5 branches and £300 for over 5 branches. All quoted figures attract vat at the standard rate.

Just email erosbusinessconsulting@gmail.com requesting Eros Auto Vatcalculator. Requesting annual or quarterly format. Single or multi practice use. (If multi state number of practices within same vat group.

Specialist progammes can be prepared where needs are exceptionel.

If required sales category types and their order can also be changed to suit your epos system to allow cut and paste or easier input. (Cost according to time for amendment in software.)

Hall Barn
The Street
Preston St Mary
Sudbury
Suffolk CO10 9NG

01787 326 468 :: 07785 353 681

solutions@erosconsultants.com

Just email your questions and we will chat