VAT on Device Plan

[Anonymous]

I have a Device Plan for my iPhone 7 at £25 a month. Is there VAT in that amount that my company can claim back? O2 Live Chat say no VAT is charged. This means my Co would have been a lot better off asking me to buy the phone outright where the VAT is charged and reclaimable. Confused

[MI5]

VAT is included in the overall credit price of the device.
When you pay an installment you are paying a small amount of VAT along with a proportion of the credit cost each month. These are not listed separately on your monthly bill.
I'm no expert on VAT, but I believe you cannot claim the total VAT portion back until you have paid the total cost completely.
Once the credit agreement is settled you will get a statement which lists the total amount paid, VAT breakdown and monthly payments received.
This is, I believe, when you can claim the VAT but you would be better off speaking to your accounts manager or get advise from an accountant.

[Wa10]

I'd possibly disagree with you there @MI5....ooh, feeling brave today, haha!

My understanding is that so long as you have a valid VAT invoice for the total balance payable, you can reclaim your input VAT at the commencement of the agreement - with the obvious proviso that if you default, O2 will write-off their VAT liability remaining, and you'd have to adjust for this on a future VAT return, effectively returning the VAT you had reclaimed but weren't entitled to.

To give a real world example, when self employed I purchased a vehicle on finance (specifically a finance/loan deal rather than leasing the vehicle) my accountant allowed me to claim the full VAT at commencement, as I had a full VAT invoice from the garage for the total value of the van. This invoice was as if I had paid in full at that point,as the finance company had done so on my behalf and I had a future liability to the finance company, not the vendor.

Not sure how the fact the vendor is also the finance provider would affect this scenario though, and whether the type of finance/loan also plays a part - presumably so?

Definitely worth having a chat with your accounts guys, they will no doubt have a VAT guru who will be able to tell you not only how it works, but also why it does, in painful detail, haha!  

[MI5]

Yeah, quite possibly so. As I said, i'm no vat expert

[Wa10]

http://www.hmrc.gov.uk/vat/managing/special-situations/instalments.htm

Credit and conditional sales and VAT

A 'credit sale' means the sale of goods which immediately become         the property of your customer but where the price is paid to         you in instalments. A 'conditional sale' is where you supply  goods to a customer but the goods remain your property until         they are paid for.

The basic tax point for a credit sale or a conditional sale         is created at the time you supply the goods or services to your         customer, which is when you should account for the VAT on the         full value of the goods. But the basic tax point may be over-ridden         and an actual tax point created if you either:

• issue a VAT invoice or receive payment before supplying           the goods or services
• issue a VAT invoice up to 14 days after the basic tax point

Whether the credit being consumer rather than business, and therefore falling under the provisions of the CCA has any bearing on this I'm not certain, but may be something to forward on to your accounts guys when asking the question?

[JW1]

O2 can produce a monthly VAT receipt for the payment made each month. 

It is difficult to set up as customer agents don't know how to request them and usually, one recieves another paper copy of the Airtime Payments which one gets online anyway!

Once setup, they are emailed from mycare <mycare@o2mail.co.uk> to which you cannot reply to.

I am still requesting more copies but did receive one PDF VAT invoice in June 2018 for a previous month and still requesting all the others.  see below:-

12.06.18

We are hereby attaching your VAT Invoice for Mobile Number: 0nnnnnnnn

against Installment Payment dated:  10.02.2018,   Invoice Number: 

CCA-2018-nnnnnn

In case of any queries, please contact Customer Services with this Invoice Number.

Regards,

VAT Invoice Team.

It can be done and don't give up!  I think customer agent systems need updating to assist everyone with this, I don't need multiple paper airtime invoices, waste or paper and postage costs to O2