VAT on Beauty Business Software and Supplies: The Cheat Sheet You Actually Need

18 Jan

VAT on digital platforms, salon software, and supplies is one of the most common error points we correct in bookkeeping reviews.

The confusion comes from:

Suppliers outside the UK
Digital services counted as reverse charge
Non-resident vendors registered for UK VAT
Wrong VAT codes used in software

If you are unsure of how to ensure that you are using the correct VAT codes check out a sneak peak of our cheat sheet copied below that gives you some tips that you can apply today.

1️⃣ Identify the supplier location
UK → standard rules.
Non-UK → likely reverse charge or PVA (imports).
👉 Check the registered address on the invoice.

2️⃣ Confirm the supply type
Digital service (SaaS/ads/automation) → usually reverse charge.
Physical goods → UK VAT or PVA if imported.
Mixed supply? Split codes that may need checking with an accountant that specialises in hair and beauty businesses.

3️⃣ Check VAT number status
Is their VAT number valid? HMRC have a really handy online tool to check the status of a vat number.

https://www.gov.uk/check-uk-vat-number

If you’re VAT registered, add your VAT number to the platform that you are buying from or subscribing to, to avoid being charged.
If charged VAT incorrectly → request a corrected invoice.

4️⃣ Apply the correct VAT code

20% UK standard-rated
RC Reverse charge
PVA Imports via postponed VAT
0% / Exempt (if applicable based on goods category)

5️⃣ Evidence + consistency
Download invoices monthly, or in real time by taking up our back office Accounts payable set up service, to automate the paperwork and receipt tasks to ensure that you dont overpay VAT or incorrectly submit informatio to HMRC.
Match VAT codes to invoice, no vat INVOICE NO VAT reclaim.
Store evidence in your VAT folder (digital or cloud). We like to use DEXT receipt capture tool to streamline this process. Get in touch with us to know how.

Remember…. No invoice = no reclaim.

Outcome

This 5-step workflow is proven to reduce:

Mis-coding
HMRC objections
Reconciliation errors
Cashflow leakage

This is the minimum standard baseline for VAT accuracy and the minimum standard that we apply for our bookkeeping clients, anything less is a liability.

If you are looking for an accountant that specialises in the hair and beauty industry get in touch with us on hello@thebeautyaccountant.co.uk to see how we can help you.

👉 Existing client - Full breakdown and E-guide is available in the Finance Hub
👉 New here - Save this for your next admin day and to stop guessing
👉 Fellow Accountant - get in touch to learn more about white label finance hubs and guides just like this that we can collaborate on, no matter what sector.