Hi.VAT refunds are not taxable income. In net terms, you should pay no VAT as the VAT you charge your customers is netted off against the VAT you pay your suppliers and you either receive a refund of the difference from HMRC or pay the difference to HMRC depending on whether you have received more VAT than you have paid or vice versa.Take a look here for more information on VAT cash accounting.I hope this helps but let me know if you have any further questions.
Ok thats understood. will give an excellent rating. But the answer begs another question. Ive signed up for the monthly subscription so I am happy to put it as a separate question. The question is as far as my R&P account is concerned for the purposes of income tax do I show the cost of supplies and my income net of VAT?