do I expense inc VAT for a LTD co not VAT registered

myk3

Hi there,

a very quick question. i have been on the phone and thrown all over the place today at HMRC and no one can answer this would you believe it!

We are a small LTD co and we are NOT VAT registered. When the company buys something for a customer or a valid expense do we also claim the VAT value as an expense?

Please don't confuse this with claiming back the VAT as we cant do this i know.

what i mean is for the corporation tax. does the VAT on an expense go against the company profits?

thanks,

michael

longforgotten

Yes.

You are not vat registered so your expenses in your accounts are gross ie. inclusive of vat.

If you were vat registered the expenses in your accounts would be net of vat.

paddyrg

You expense what it cost you, so in your case, the full (gross) figure, much like you account for any other supplies. The ex-VAT figure is only relavent if you get into the wonderful world of VAT registration (which may or not be worthwhile to you)

myk3

paddyrg wrote: »

You expense what it cost you, so in your case, the full (gross) figure, much like you account for any other supplies. The ex-VAT figure is only relavent if you get into the wonderful world of VAT registration (which may or not be worthwhile to you)

Thanks this is EXACLY what i thought.

really funny thing is someone from the tax office called me back and said that we only account for NET VAT not GROSS! i know that he he wrong he didnt sound like he had a clue!

thansk,

mike

paddyrg

Is it worth your while registering, by the way? Do you sell retail or b2b? If your customers are businesses it may be cost effective for you. I am below the mandatory threshold, but it makes sense as my clients are all businesses (who are VAT reg), and I recover VAT on supplies

myk3

paddyrg wrote: »

Is it worth your while registering, by the way? Do you sell retail or b2b? If your customers are businesses it may be cost effective for you. I am below the mandatory threshold, but it makes sense as my clients are all businesses (who are VAT reg), and I recover VAT on supplies

we are vat registered as of Oct last year. I just wanted to keep things simple when asking the question

thanks for your help!