new business & VAT

[taffyracer]

Am i right in thinking that a new business that regsiters for vat can reclaim VAT up to three years before you registered for VAT for goods and reclaim VAT up to six months before you registered for VAT for services?

[mrmr96]

taffyracer said:

Am i right in thinking that a new business that regsiters for vat can reclaim VAT up to three years before you registered for VAT for goods and reclaim VAT up to six months before you registered for VAT for services?

Spot on.
http://www.hmrc.gov.uk/vat/start/register/purchase...

[Eric Mc]

taffyracer said:

Am i right in thinking that a new business that regsiters for vat can reclaim VAT up to three years before you registered for VAT for goods and reclaim VAT up to six months before you registered for VAT for services?

Only for items that are still in use at the point you apply for registration - usually fixed assets and unsold stock.

[seaninog]

mrmr96 said:

taffyracer said:

Am i right in thinking that a new business that regsiters for vat can reclaim VAT up to three years before you registered for VAT for goods and reclaim VAT up to six months before you registered for VAT for services?

Spot on.
http://www.hmrc.gov.uk/vat/start/register/purchase...

Erm... I thought the services bit was more flexible. My accountant told me (after I set up my business last September) that any VAT on a service provided within the previous year or so could be claimed if I could show it was related to the business. He said there was no hard and fast rule and it was at HMRC's discretion. Indeed I note the language of HMRC when referring to the three year and six month rules in the supplied link: "You can generally claim..."

I'm yet to file my first VAT return as I only got my number last week so I don't know how it will work in practice.

[singlecoil]

Looking at your profile I guess most of your customers are VAT registered, so your registering too is basically good. I know sometimes people are keen to register in order to get vat back on leased vehicles etc, but tend to forget that they are simultaneously making themselves quite a bit more expensive if most of their customers are private individuals.

[taffyracer]

ok, so what happens if the invoices are not made out to you, tehy're not going to be as obviously a new venture won't technically have old suppliers by virtue of it being new?

[Eric Mc]

If they aren't made out to the VAT registered entity, then the VAT cannot be reclaimed. However, low value invoices don't need to show the name of the customer on the invoice, so there is little way HMRC could claim that an old , low value invoice hadn't been made out to you or your business.

Edited by Eric Mc on Sunday 21st February 22:17

[taffyracer]

what is classed as a low value?

[Eric Mc]

I knew that would be the next question.

£250 (and the trader must make retail sales)

Here's what HMRC says -

"Where simplified or modified VAT invoices can be issued
Simplified VAT invoices
If you make retail sales and you make a sale of goods or services for £250 or less including VAT, then when a customer asks for a VAT invoice, you can issue a simplified VAT invoice that only needs to show:

the seller's name and address
the seller's VAT registration number
the time of supply (tax point)
a description of the goods or services
Also, if the supply includes items at different VAT rates then for each different VAT rate, your simplified VAT invoice must also show:

the total price including VAT
the VAT rate applicable to the item
If you accept credit cards, then you can create a less detailed invoice by adapting the sales voucher you give the cardholder when you make the sale. It must show the information described in the six bullets above

You do need to keep copies of any less detailed invoices you issue"

[Eric Mc]

And here's what they say about "Pro-Formas". Note that they cannot justy be issued "willy nilly".

Pro-forma invoices
If you need to issue a sales document for goods or services you haven't supplied yet, you can issue a 'pro-forma' invoice or a similar document to offer goods or services to customers.

"A pro-forma invoice is not a VAT invoice, and you should clearly mark them with the words 'This is not a VAT invoice'.

If your potential customer accepts the goods or services you're offering them and if you actually supply them, then you'll need to issue a VAT invoice within the appropriate time limit - see the section in this guide on time limits for issuing invoices.

If you've been issued with a pro-forma invoice by your supplier, you can't use that to claim back VAT on the purchase. You must obtain a VAT invoice from your supplier"

[Scooby_snax]

taffyracer said:

Am i right in thinking that a new business that regsiters for vat can reclaim VAT up to three years before you registered for VAT for goods and reclaim VAT up to six months before you registered for VAT for services?

Eric is clearly the expert here but I am a little confused. How can a new business claim back 3 years, what do you mean by new?
It is also my understanding that reclaiming VAT can only be done if the items were purchased in the same entity's name. So if you were a sole trader non VAt registered then changed the business to a Ltd Co with VAT registration then you couldnt reclaim anything for the time the business was a sole trader

[Eric Mc]

Scooby_snax said:

taffyracer said:

Am i right in thinking that a new business that regsiters for vat can reclaim VAT up to three years before you registered for VAT for goods and reclaim VAT up to six months before you registered for VAT for services?

Eric is clearly the expert here but I am a little confused. How can a new business claim back 3 years, what do you mean by new?
It is also my understanding that reclaiming VAT can only be done if the items were purchased in the same entity's name. So if you were a sole trader non VAt registered then changed the business to a Ltd Co with VAT registration then you couldnt reclaim anything for the time the business was a sole trader

A sole trader can reclaim VAT on equipment he may have purchased up to three years before he either

started trading

registered for VAT

The proviso is that the equipment must be being used in the business at the point the VAT is reclaimed.

Obviously, if the business is being set up as a limited company, then it didn't exist three years ago so could not have bought anything at that point in time.

[taffyracer]

Ok, so if for instance I have bought a load of stuff that I plan to sell or use in a business I have not yet set up, I can form the company, register for VAT and then reclaim the vat on those items, right?

Last qu. is it ok to register a company name if it is listed as being dissolved, are there any rules over how long a company has to be dissolved before the name can be re-used?

Edited by taffyracer on Wednesday 24th February 21:10