"Personal" VAT registration
Discussion
I'm thinking out loud here, may not be possible or feasible.
I'm doing a property refurb and will incur roughly £20k's worth of VAT from the builder. Once completed I'll rent out long term via an agency.
If I was VAT registered could I feasibly offset VAT from builder and VAT charged by letting agent?
I'm doing a property refurb and will incur roughly £20k's worth of VAT from the builder. Once completed I'll rent out long term via an agency.
If I was VAT registered could I feasibly offset VAT from builder and VAT charged by letting agent?
wattsm666 said:
If the property is residential I think not, you can only reclaim vat that relates to a taxable supply. Residential letting are exempt. Commerical can be exempt or taxable.
I think this used to be the case but was withdrawn. You could reclaim part of the VAT. This isn't what I mean, more like I become VAT registered
Kudos said:
This isn't what I mean, more like I become VAT registered
Yes you can.It's normal for sole traders.
e.g. Jim Smith trading as Smith Builders can become VAT registered and if Jim Smith does any work, whether as Smith Builders, or Jim Smith, or JS Builders etc it doesn't matter he still has to charge VAT where applicable as it is he who is registered as the 'legal entity' as it were.
I don't know if that would impact on your current work. If you are self employed for example but trade under the VAT limit, then for your refurbishment work you would either need to set up a Ltd Co or charge VAT as appropriate to your customers.
JM said:
If you are self employed for example but trade under the VAT limit, then for your refurbishment work you would either need to set up a Ltd Co or charge VAT as appropriate to your customers.
Listen up. You as a small business have some profitable choices to make regarding VAT.The £77,000 VAT registration threshold is the level above which you MUST register if your business or trade is VATable. But you can still register below that limit if you want to.
So, business person, if you are selling zero rated items like fruit and veg, or kids clothes, or whatever, or if all your customers are themselves VAT registered, then go ahead and register and benefit by recovering all the VAT on your purchases and expenses.
So a part-time accountant, say, turnover £10000 a quarter, with business VAT registered clents, would charge VAT of £2000. If his motoring costs were say £2000, plus VAT of £400, he would pay over £1600 a quarter. So he recovers £1600 a year in input VAT, additional profit for his business
Also, bear in mind the VAT Flat Rate Scheme. If you have a business that charges VAT to customers, but you barely use a car and don't buy much, join the flat rate scheme and benefit further, as you pay a flat percentage of your gross turnover as your VAT payment, regardless of your lack of expenses. The percentage is a general one, and is generous, as they want you in the scheme..
So if the same accountant lives in the centre of Manchester and goes to his clents on the bus, tram, foot, train or horse, ie incurring no VAT, with a quarterly turnover of £10,000 plus VAT of £2000, he would normally have to pay over all of the £2000 of VAT. In the flat rate scheme, his VAT payment would be £12,000 x 14.5%. = £1740, so better off by £260 a quarter, or £1,040 a year. 14.5% is the Flat Rate Scheme rate for accountants. Others have different rates, mostly a lot lower.
Flat Rate, by and large, does work out beneficially - most of the time. However, even though it is supposed to simplify the preparation of VAT returns for small traders, it can cause really big problems on occasions.
If, for example, the aforesaid accountant provided a service to, say, an overseas customer, he might be able to Zero Rate the fee to that customer.
However, if he has opted for Flat Rate VAT, he will find that he still has to account for 14.5% Flat Rate VAT on that Zero Rated fee.
I've seen a couple of my clients making the mistake of deciding to omit a Zero Rated sales invoice from their Flat Rate VAT calculation.
If, for example, the aforesaid accountant provided a service to, say, an overseas customer, he might be able to Zero Rate the fee to that customer.
However, if he has opted for Flat Rate VAT, he will find that he still has to account for 14.5% Flat Rate VAT on that Zero Rated fee.
I've seen a couple of my clients making the mistake of deciding to omit a Zero Rated sales invoice from their Flat Rate VAT calculation.
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