Reclaiming VAT pre registration query

missymugwump

Hi

I am now a VAT registered Ltd company,I previously did the same work for the same companys but as a private individual.

I received a letter today stating I can reclaim VAT prior to my registration.
I have looked at HMRC and various other forums,these are the things I would like to back claim the VAT on are they allowable please.
Or are there percentages on any of these I can claim ?

1) PC bought for business use only 6 months ago approx
2) Car bought for Business and Social domestic bought in 2007
3) My fuel (petrol) receipts for business miles prior to registration going back 1 year all from 2010
4) Services supplied ie..car maintenance and repairs used 50% for business use all from 2010
5) Hotel rooms used for business all in 2010
6) Other office equip items of small values ie...filing cabinet,printer etc... all in 2010


All of these things are still in my posession and still used in the new business.


I would love someones help here please I am a bit confused.

Thank you in advance

paddyrg

In honesty I would ask your accountant as some of the value of those purchases supported your doing business whilst not charging VAT, so HMRC would lose out, and pretty much all tax laws are about stopping HMRC from losing out! I wouldn't leave that kind of thing to a forum, but seek specific advice.

steve1980

Do you clear over £68,000 a year? If not then why have you registered for VAT? You now have to charge EVERYONE VAT.

GuidoT

Basic rules

The basic rules are that you can reclaim the input VAT on goods you have purchased in the three years prior to registering for VAT, provided you still have them on hand at the time of registration. You can also recover the VAT on services incurred up to six months prior to registering for VAT, provided you have not supplied them on or they have not been applied to goods that you have sold (e.g. processing services). In both cases, you have to retain the original purchase invoice as proof of entitlement to deduct input tax. The legislation is contained within Regulation 111 of SI 1995/2518, and clearly states the limited number of exceptions to these basic rules.

From here.

paddyrg

steve1980 wrote: »

Do you clear over £68,000 a year? If not then why have you registered for VAT? You now have to charge EVERYONE VAT.

There are good reasons, for instance if the OP sells childrens clothes and shoes, or fresh produce, or deals mostly in B2B where her clients are VAT reg'd anyway, meaning it makes sense to recover VAT on supplies...

missymugwump

steve1980 wrote: »

Do you clear over £68,000 a year? If not then why have you registered for VAT? You now have to charge EVERYONE VAT.

Yes I do as I have gone full time with it and I was part time before.

missymugwump

GuidoT wrote: »

Basic rules

The basic rules are that you can reclaim the input VAT on goods you have purchased in the three years prior to registering for VAT, provided you still have them on hand at the time of registration. You can also recover the VAT on services incurred up to six months prior to registering for VAT, provided you have not supplied them on or they have not been applied to goods that you have sold (e.g. processing services). In both cases, you have to retain the original purchase invoice as proof of entitlement to deduct input tax. The legislation is contained within Regulation 111 of SI 1995/2518, and clearly states the limited number of exceptions to these basic rules.

From here.

Interesting reading thank you for the link
I have emailed my accountant but she is out of the office until Monday sadly

bobsmum

It appears to be 4 years prior that you can recover VAT paid out on goods for your business -

"If you buy goods or services before you registered for VAT, you may be able to reclaim the VAT you paid on them. You can generally reclaim VAT on goods you bought up to four years before you registered for VAT, and services you bought up to six months before you registered. Remember too that you may be able to backdate your VAT registration by up to four years although once your date of registration has been agreed with HM Revenue & Customs (HMRC), it cannot normally be changed.
There are conditions you must meet in order to reclaim this VAT, including keeping specific records of what you bought and how you use, sell or dispose of them."


See full up-to-date info from VAT section of HMRC website here.

Happy reading!

HariboJunkie

steve1980 wrote: »

Do you clear over £68,000 a year? If not then why have you registered for VAT? You now have to charge EVERYONE VAT.

It makes sense in some cases. We registered for the flat rate scheme for VAT before reaching the threshold as we don't buy alot for the business (consultancy work) so we charge our clients 20% VAT but only pay HMR&C 12% VAT on invoices paid to us. But it means we can't claim VAT back on purchases. Like the OP we were able to claim, however, the VAT back on start up purchases.

Pennywise

Hold your horses here. It's not as simple as made out because the goods and services were bought by you personally as a sole trader, yet you sold your business to your new limited company and it's the limited company that is now VAT registered. Remember the limited company is a separate legal entity.

For the VAT reg limited co to reclaim the input VAT, you have to meet their criteria, basically the goods/services must have been bought by someone who becomes an officer/shareholder (tick), but also the company must reimburse that person (oh dear) and the goods/services must have been bought for use in the business (oh dear).

Taking the first problem area, the company needs to pay you for the goods/services - fair enough, but that means your final accounts as a sole trader suddenly have an income source to set against the costs, meaning your profits are higher, hence more personal tax.

Second problem area - were the goods bought for your use as a sole trader or as a limited company? If you used them in your sole trader business, then they weren't bought for the purpose of the VAT reg limited company business. So have you "sold" the business to your limited company (probably ok) or have you sold the assets (probably not OK).

You've missed a trick here which "could" cost you dearly. You should have registered for VAT as a sole trader which would have made it easy for you to reclaim the VAT on goods & services, and then transferred the whole lot to the limited company.

As it stands, you may not be allowed your pre-registration input VAT claim. Of course, you could claim it anyway and just hope that the VAT inspector either doesn't inspect your records or doesn't notice. I've seen HMRC inspectors pick up on this kind of thing and also seen them ignore it and it's quite a "fine" line between the circumstances when it's done right and when it isn't - some tax inspectors ignore it because it's not worth the effort of a challenge - others assess and hope that the taxpayer doesn't think it worthy of appeal due to time and costs etc. At the end of the day, if the figures are small, probably no-one will care, but if the figures are large, you may face challenge in which case probably best to consult a VAT expert before making a claim just to make sure.

chalkie99

steve1980 wrote: »

Do you clear over £68,000 a year? If not then why have you registered for VAT? You now have to charge EVERYONE VAT.

Although it appears irrelevant to the OP here, that statement is wrong and could mislead others.

The requirement for VAT registration is based on turnover, i.e. total sales, not on profit (or what you clear as it has been put).

Also the current threshold is £70,000.