Simple VAT Question

[blueski]

Hi all,

I'm about to commission a website, which will be free to use but will I hope generate advertising revenue in the future. This is a side project to run alongside my day job and therefore I haven't looked carefully at whether I should be a sole trader or an Ltd, as the day it starts generating revenue is still some time away.

However, the web designer has given me a quote which includes VAT. My question is - what's the most straightforward way to claim this VAT back in due course?

I imagine this is a very basic question for the majority on here, but would much appreciate any help. In the mean time, I'm off to buy myself a book on the basics!

Thanks,
Russell

>> Edited by blueski on Saturday 27th May 15:52

[cannedheat]

my understanding is that VAT paid on items is offset against VAT charged to customers and then the difference paid to mr vat man.

ergo, when you start charging VAT to the people advertising, you can then offset this against VAT your paying...

hope this helps (and it's not too wrong?)

[Eric Mc]

You can only claim back VAT on your costs if you are actually REGISTERED for VAT. You have no obligation to register for VAT unless your annual turnover of VATable goods or services exceeds or is likely to exceed £61,000.

The good news is that you can claim back VAT on some costs incurred BEFORE you were VAT registered.

[Parrot of Doom]

Eric Mc said:

The good news is that you can claim back VAT on some costs incurred BEFORE you were VAT registered.

Unfortunately, only goods that you still possess like furniture, computers etc. Petrol, phone bills etc you can't reclaim before the date of registration.

I have no idea where a website comes on that list though!

[Eric Mc]

Setting up a website would normally be considered a Captal Cost rather than a normal Expense. From an Income Tax/Corporation Tax point of view, the Revenue would expect you top claim Capital Allowances on this type of expenditure. The assumption is that once set up, it will have a lifespan of over a year - possibly at least three or four.

With that in mind, the VAT view on it would be that the VAT could be claimed on this initial cost if and when the business eventually registered for VAT at a later date.