Zero rated work? Do you just take their word for it?

It's always nice when a customer lets you know that the work that you would like to carry out for them is zero rated. In essence it means that you can still claim back the VAT in relation to your expenses for this job even though you do not have to pay over VAT on the income to HMRC (this does not include business on the Flat Rate Scheme).

In this example we will refer to completion of a wetroom in a disabled persons' house.

What do you do? Sure it's tempting not to charge the VAT at the standard rate of 20%, but if you did have an investigation what would happen? Surely you can't just take the customers word? How do I protect myself and of course, my business?

HMRC state that you need evidence to back up your claim, should you ever get investigated

A declaration should:

  • contain enough information to show that your customer qualifies for the relief
  • be separate - or clearly different from - any order form or invoice for the goods or services

Okay so you now know what kind of paperwork HMRC are looking for to be classified as evidence. Now, all you need to do is get the document signed. But the disable customer cannot actually sign the declaration? The disable customer is a child? The customer has only sent an email?

HMRC state that if the customer cannot actually sign the declaration due to age/disability then it can be signed by HMRC will accept the signature of the person's parent, guardian, doctor or another responsible person.

You can accept electronic customer declarations, for example by email or fax. With some electronic declarations it's not possible for the customer to sign their name. So it's important you keep some evidence of where the document came from, like the original email message that shows the sender's address.

Like a paper declaration, it should be clear that an electronic declaration isn't an order form or invoice.

Of course, if think the customer's declaration isn't legit - then don't zero rate it. There are penalties for making / accepting false declarations... and the whole point of this blog is to save you money.

P.S. - if you would like a template for a 'declaration' email me:



Business Advice, HMRC, Tax, VATtaxswagComment