VAT advice - new part time start up

[mash.]

Hi guys, quite a few random questions and hoping they can be answered

I'm starting up a part time Motorsport prep & set up company

Firstly for the lease would it be better to put it on my trading name or personal name if I want to claim back the VAT on rent or doesn't it matter?

Following on from this I guess its best to keep it this in a business account rather than personal?

Also most banks require proof of trading or premises, how can provide that if I havetn started trading yet nor moved into the unit?

Many thanks

[SantaBarbara]

What do you expect your turnover to be?

[mash.]

SantaBarbara said:

What do you expect your turnover to be?

less than 20,000 year.

I would volunteer to become VAT reg

[Eric Mc]

Don't voluntarilly register for VAT if you want to avoid the horrors of Making Tax Digital. At the moment, MTD has been cut back to those who are VAT registered. It was going to be for all sole traders and partnerships.

[anonymous-user]

mash. said:

less than 20,000 year.

I would volunteer to become VAT reg

Why would you do that?

[ymwoods]

Regarding the rent/unit and who to register it as:

If your a LTD company and the person who owns the unit does not want a personal guarantee from yourself, do it as the LTD company. if it all goes south it protects you.

Otherwise, makes little difference but you should do it as your LTD if it will be used by your LTD, keeps everything separate which helps if it all goes south.

Vat wise, if you are going to be doing lots of work for companies that are also VAT registered then it can be beneficial, otherwise, it just makes you 20% more expensive...looking at it very simply, before someone comes storming in saying different. There is a very small set of circumstances where it is in your interest to volunteer for VAT, otherwise, steer well clear for as long as you can.

[mash.]

desolate said:

Why would you do that?

Because ill have big outgoing and the business will be ran part time with my main job bringing the money in

[mash.]

Just to give you guys an outlay of what I'm doing...

So the main reason this has come about is that I'm renting a unit to share with a few friends for hobby purposes, race cars and track cars.

I was looking at running a part time business (motorsport prep, corner weighting) along side my main job as a project manager.

So If the business covers its cost than that's what essentially it was set out to do.

I was planning on becoming vat registered so I could recoup the vat back I paid on rent. The landlord has chosen to tax on his unit.
So yeah vat registered, charge the guys storage plus vat, and do a few jobs on the side legit with insurance rather than cash in hand mates job...

Either way I'm getting the unit, but just wanted some kinda progression.

I'm 22, I'm really in the deep end with this researching ALOT as I go, so I would really appreciate helpful clear advice, rather than patronising forum put downs. I love learning about new stuff, just I don't know it all so need the help with it.

thanks.

[anonymous-user]

I would definitely have a word with an accountant.

I would be very surprised if you could continually reclaim more VAT than you will pay.

[mash.]

desolate said:

I would definitely have a word with an accountant.

I would be very surprised if you could continually reclaim more VAT than you will pay.

I suppose its more to do with I would have to pay VAT anyway, so if I could reclaim it and offset it against something else, I'm technically benefitting, aswell with being a motorsport company I can also offset fuel cost going to the circuit for a days testing etc.

But yes your right I need to talk to an accountant, but hence the point behind this post. I need to decide whether if I need to sort out my bank account plus company before I take on the lease

[Eric Mc]

mash. said:

desolate said:

Why would you do that?

Because ill have big outgoing and the business will be ran part time with my main job bringing the money in

That may not be a good enough reason. You need to understand ALL the implications of being VAT registered before jumping into it.

[poppopbangbang]

desolate said:

I would definitely have a word with an accountant.

I would be very surprised if you could continually reclaim more VAT than you will pay.

Many, many UK businesses are continually reclaiming more VAT than they pay. If you are based in the UK and predominantly work in Europe/US/Asia or Export to Europe/US/Asia B2B you will pay VAT on most of your expenses and stock but not charge VAT when it is sold as it is sold to a VAT registered EU business or a business based outside of the EU. The VAT Man will likely want to come and have a look a couple of times to make sure if it is above board and correct though!

[Steve H]

If you are able to continually claim VAT back it may seem like a good idea but put simply it would a sign that you are making a loss all the time.

If you really intend to get this to cover it's own costs you are probably better off not being VAT registered as you will end up paying the tax man each quarter.

Generally speaking the only times to voluntarily register would be if all your customers were also going to be VAT registered (so they don't mind you adding 20% on) or if you work in a low/zero VAT industry which allows you to claim back off purchases at the main 20% while charging VAT at a lower rate.

If you are going to be dealing with the public you would be better off just charging 20% more and keeping it!

[paulrockliffe]

mash. said:

So the main reason this has come about is that I'm renting a unit to share with a few friends for hobby purposes, race cars and track cars.

I was looking at running a part time business (motorsport prep, corner weighting) along side my main job as a project manager.

So If the business covers its cost than that's what essentially it was set out to do.

You need to speak to an accountant; it sounds like you might not be running a business at all, trading without the intention to profit may cause you problems. Plus you'll need to apportion VAT you reclaim between it's business use and non-business use, it sounds like the non-business use may be dominant.

Speak to an accountant.

[anonymous-user]

poppopbangbang said:

Many, many UK businesses are continually reclaiming more VAT than they pay. If you are based in the UK and predominantly work in Europe/US/Asia or Export to Europe/US/Asia B2B you will pay VAT on most of your expenses and stock but not charge VAT when it is sold as it is sold to a VAT registered EU business or a business based outside of the EU. The VAT Man will likely want to come and have a look a couple of times to make sure if it is above board and correct though!

That I can agree with, but it's a completely different scenario that that which the OP proposes.

I am sure the VAT man would want to be convinced that this was a genuine business run with the intention of making a profit, rather than a convenient way of avoiding VAT on rent, fuel and parts for cars that are also used for leisure.

[mash.]

well according to my cash flow forecast it makes money in the first 2 months... lol (before people jump down my throat yes I know there only so much you can forecast)

But yeah maybe I've overlooked the VAT register part, don't get me wrong my responses are brief, but I have researched it a lot more than what my answer convay

But ok -