Claiming back VAT

podperson

As mentioned above you might be able to register and get your first refunds but if you are consistently showing accounts with no sales because you're just giving things away for free then you're going to get de-registered and have to pay the money back.

For the effort you're putting in here couldn't you try looking into setting up a legal business instead of trying to scam the tax office.

JasonLVC

ChristopherM87 wrote: »

By "sell" do I have to make a profit? Ie running web hosting for non-profit or a loss, can I still claim back VAT?

HMRC have internal guidance as to what the definition of "in business" means. You don't have to make a profit to be "in business" but you do have to operate and run as a business.

So by all means give away your services for free but HMRC would expect to see clients beyond your family, a marketing strategy and activity, basically it differentiates between a bloke selling some gear at the car boot and a bonefide business, see here :-

http://www.hmrc.gov.uk/manuals/vbnbmanual/VBNB22000.htm

Have a read of this link, it details case law and precedent on the bundaries. For example, a business earning £2.50 a week is unlikely to be seen as a business in law.

If your business proposal is to offer free hosting and earn income on adverts, the advert income is subject to sales VAT. if the business is making a loss then HMRC may take the view you are not a viable business on the basis you fail the business test and deregister you anyway.

In theory offering free server space is fine but you need the advert income to justify the VAT registration. If that income is minimal then are you "in business" or is it just a side-line hobby. That is the hurdle to get over as a loss making venture with huge outgoings and little income may not meet the "business" test.

paddyrg

Just remember that cash recovered by HMRC audits is up something like 68% this year (it was in the FT). HMRC know some people take the Mickey Bliss with their tax returns, and a model where you claim VAT but don't charge it will invite a phone call from them at least.

ChristopherM87

JasonLVC wrote: »

So by all means give away your services for free but HMRC would expect to see clients beyond your family, a marketing strategy and activity, basically it differentiates between a bloke selling some gear at the car boot and a bonefide business, see here :-

http://www.hmrc.gov.uk/manuals/vbnbmanual/VBNB22000.htm

Have a read of this link, it details case law and precedent on the bundaries. For example, a business earning £2.50 a week is unlikely to be seen as a business in law.

Thanks that link clears up a lot of my confusion. i just know have to think about how I can offer my IT skills as a business.

heretolearn_2

So essentially you just want to buy a server for your own personal use and find a way to get yourself a discount on it by pretending to be a business and VAT registered.

Honestly, is it worth it?

If your server is £1000 + VAT, that means the VAT is £200.

So for the sake of saving £200 you are going to go through all the faff of setting up and running a phoney business, and STILL probably end up in trouble with the HMRC.

Personally, if I were going to be a criminal (and tax evasion is a criminal act), I wouldn't do it for £200 And VAT fraud is one area the HMRC have defined as something they will go for criminal investigation rather than civil investigation.

Try reading this link and stop being such a twerp. What you are proposing is a criminal act. Full stop. You'll find what you want to do listed as Vat 'Bogus' registration repayment fraud.

http://www.hmrc.gov.uk/prosecutions/crim-inv-policy.htm

motorguy

heretolearn wrote: »

So essentially you just want to buy a server for your own personal use and find a way to get yourself a discount on it by pretending to be a business and VAT registered.

Honestly, is it worth it?

If your server is £1000 + VAT, that means the VAT is £200.

So for the sake of saving £200 you are going to go through all the faff of setting up and running a phoney business, and STILL probably end up in trouble with the HMRC.

Personally, if I were going to be a criminal (and tax evasion is a criminal act), I wouldn't do it for £200 And VAT fraud is one area the HMRC have defined as something they will go for criminal investigation rather than civil investigation.

Try reading this link and stop being such a twerp. What you are proposing is a criminal act. Full stop. You'll find what you want to do listed as Vat 'Bogus' registration repayment fraud.

http://www.hmrc.gov.uk/prosecutions/crim-inv-policy.htm

Not to mention that if you are VAT registered you have to be registered as a business. Once you register as a business you need to submit accounts....

ILW

pgilc1 wrote: »

Not to mention that if you are VAT registered you have to be registered as a business. Once you register as a business you need to submit accounts....

Not strictly true. You will have to do a tax return though.