Goods before VAT registration


P

Peter

Just completing my first VAT return, due by the end of the month. ( !!)

My Accountant argued he was to busy to take this on due to other clients SA
returns but said it was fairly easy. Maybe so for an Accountant........

As a roofer I have to purchase considerable tools for the job which wear out
quickly, cutting discs, drills etc. I tried telephoning the VAT help line,
but shut at the weekends.The VAT send me a guide and it suggests that I may
be able to claim back some VAT before registration.However it refers to
goods, and not small tools.

Does this mean I can only claim back VAT on good I purchased to sell ( none)
or are my small tools allowed ( £800 of tools )

Thank you
 
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T

Tim

As a roofer I have to purchase considerable tools for
the job which wear out quickly, cutting discs, drills etc...

Does this mean I can only claim back VAT on good I purchased
to sell ( none) or are my small tools allowed ( £800 of tools )
Do you still have all the tools to hand, or have they already worn out &
been thrown away?
 
P

Peter

Tim said:
Do you still have all the tools to hand, or have they already worn out &
been thrown away?
To be honest maybe 50% have been used and disposed of, I can account for
£403 of tools still in use, but some are fairly cheap e.g £8.90 for Stanley
Knife for cutting felt.
 
D

DoobieDo

To be honest maybe 50% have been used and disposed of, I can account for
£403 of tools still in use, but some are fairly cheap e.g £8.90 for Stanley
Knife for cutting felt.
claim the VAT on those you still have.
 
T

Troy Steadman

Just completing my first VAT return, due by the end of the month. ( !!)

My Accountant argued he was to busy to take this on due to other clients SA
returns but said it was fairly easy. Maybe so for an Accountant........

As a roofer I have to purchase considerable tools for the job which wear out
quickly, cutting discs, drills etc. I tried telephoning the VAT help line,
but shut at the weekends.The VAT send me a guide and it suggests that I may
be able to claim back some VAT before registration.However it refers to
goods, and not small tools.

Does this mean I can only claim back VAT on good I purchased to sell ( none)
or are my small tools allowed ( £800 of tools )

Thank you
Have a look at your bankings and see which was the last invoice you
banked before you became VAT registered. Everything relating to that
Invoice and the Invoice before it is VATless. Everything relating to
Invoices after it have:

1) VAT payable on the Outputs (your income when banked)
2) VAT recoverable on the Inputs (your expenditure)

I'm assuming you are Cash Accounting which means you don't have to pay
the Output VAT until you have received the money in your hand. On the
Input side it is almost impossible to Cash Account reliably so
you might as well use the Invoice date which often coincides.

It is hard for a Builder to start keeping things like invoices but it is
very important. It is probably safest not to claim petrol for the time
being until your Accountant has had a look.




--
 
T

Troy Steadman

Troy Steadman said:
Have a look at your bankings and see which was the last invoice you
banked before you became VAT registered. Everything relating to that
Invoice and the Invoice before it is VATless. Everything relating to
Invoices after it have:
Oops got that wrong, Should read:

Have a look at your Invoices and see which was the last Invoice you
issued before you became VAT registered. Everything relating to that
Invoice and the Invoice before it is VATless.

Only when the *later* Invoices start arriving in the Bank (don't
forget to add on any tax deducted under the CIS scheme) do you have to
account for VAT.

As you can see it is not easy, do the best you can and your accountant
will tidy up after you!


--
 
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T

Tim

Oops got that wrong, Should read:

Have a look at your Invoices and see which was the last Invoice
you issued before you became VAT registered. Everything
relating to that Invoice and the Invoice before it is VATless.
But there *is* VAT on the invoices he received when buying ( & paying for)
his tools - that's why he's asking the question!
Only when the *later* Invoices start arriving in the
Bank (don't forget to add on any tax deducted under
the CIS scheme) do you have to account for VAT.
Does this answer the OP's question? - ie, can he reclaim the input VAT paid
on the tools he bought prior to VAT registration?

AIUI (IANAA), he can for items purchased during the previous three years and
still at hand when trader becomes registered for VAT (and for *services*
purchased during the previous 6 months).
 
P

Peter

Thank you for all the excellent guidance. VAT Return done, but never again
!!
 
T

Troy Steadman

Thank you for all the excellent guidance. VAT Return done, but never again
!!
You don't want your accountant doing your VAT returns though, much more
cost-effective to find a good local bookkeeper who understands CIS.



--
 
N

Nogood Boyo

Goods means things other than services. It includes small tools.
You can claim on tools as long as you still had them when you
registered.
Ignore this. It's wrong.
But there *is* VAT on the invoices he received when buying ( & paying for)
his tools - that's why he's asking the question!

Hopeless...

Does this answer the OP's question? - ie, can he reclaim the input VAT paid
on the tools he bought prior to VAT registration?

AIUI (IANAA), he can for items purchased during the previous three years and
still at hand when trader becomes registered for VAT (and for *services*
purchased during the previous 6 months).
Correct.

The VAT Guide (trimmed a bit):

11.2 What are the conditions for treating VAT on goods as input tax?

You can treat as input tax the VAT on goods which you obtained or
imported before you were registered if:
* the goods were supplied to the person who is now registered for
VAT;
* the goods were supplied not more than 3 years before the
business was registered [...];
* the goods were obtained for the business which is now covered by
the VAT registration;
* you still hold the goods or they have been used to make other
goods which you still hold; and
* you compile a stock account of the goods. This must show the
quantities of goods and the dates when you obtained them. If you
used any goods to make other goods, or disposed of them after
you were registered for VAT, the account must give details, with
dates.
Remember, you cannot claim VAT incurred on goods consumed before
registration such as petrol, electricity or gas.
[...]

11.3 What are the conditions for treating VAT on services as input tax?

You can treat as input tax the VAT on services which you received before
you were registered if:
* the services were supplied to the person who is now registered
for VAT;
* the services were received for the purposes of the business
which is now covered by the VAT registration and related to its
taxable activities. [...];
* the services were received not more than 6 months before you
were registered;
* the services were not related to goods which you disposed of
before you were registered (such as repairs to a machine which
was sold before registration); and
* you compile an account of these services. This must describe the
services and the dates when you received them. If the services
related to goods which you disposed of after you were registered
for VAT, the account must give details, with dates.
[...]
 
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N

Nogood Boyo

You don't want your accountant doing your VAT returns though, much more
cost-effective to find a good local bookkeeper who understands CIS.
And VAT. Which excludes you...
 
J

Jonathan Bryce

Troy said:
You don't want your accountant doing your VAT returns though, much more
cost-effective to find a good local bookkeeper who understands CIS.
But if the accountant does your VAT returns for you, they will do it in such
a way that the year end accounts and tax returns are a lot easier to do.
 
D

DoobieDo

dozy [email protected]

read above...

<quote>
Thank you for all the excellent guidance. VAT Return done, but never
again
!!
</quote>

you are getting to sound more like the troll everyday
 
T

Troy Steadman

Nogood Boyo said:
Ignore this. It's wrong.
No it isn't wrong Nogood, it is more important to establish the cut
off than it is to worry about Input VAT on services and stock
(especially since the OP has said there isn't any!).
Correct.

The VAT Guide (trimmed a bit):
<then snipped completely>

Fair enough, you have answered the OP's question precisely, what I have
tried to do is make him aware of the wider questions:

1) The cut off.
2) Cash Accounting.
3) CIS dedections.

How can you give proper advice to a newbie filling out their first VAT
Return without ever once mentioning Output VAT?


--
 
T

Troy Steadman

But if the accountant does your VAT returns for you, they will do it in such
a way that the year end accounts and tax returns are a lot easier to do.
I have never worked in a practice that welcomed the bookkeeping element.

If a partner does the work it tends to be done without sufficient
narrative throwing up big problems later, and at £140 per hour
how can that be cost-effective?

If a low-grade memeber of staff does it the practice still need to
recover £45 an hour and the same errors and problems are sown into the
books as would have been if a bookkeeper had been employed at £15
per hour.


--
 
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T

Tim

How can you give proper advice to a newbie filling out their
first VAT Return without ever once mentioning Output VAT?
The OP only asked about Input VAT (and only a specific question about
that) - if we'd also mentioned Output VAT, then Martin would complain about
us answering more than just the question asked ... !!
 
T

Troy Steadman

Tim said:
The OP only asked about Input VAT (and only a specific question about
that) - if we'd also mentioned Output VAT, then Martin would complain about
us answering more than just the question asked ... !!
True Tim.

But it is important for a Roofer to realise that when Martin goes
through his books with a fine tooth comb looking for...whatever Martin
is looking for...that there is a clear demarcation between:

[checks to see if Simon is looking] Cash jobs and non-cash jobs.
VAT jobs and non-VAT jobs [same thing]
and the next thing which is coming if the OP carries on expanding
Ltd Co jobs and Sole Trader jobs.

Cut off is everything.


--
 
J

Jonathan Bryce

Tim said:
The OP only asked about Input VAT (and only a specific question about
that) - if we'd also mentioned Output VAT, then Martin would complain
about us answering more than just the question asked ... !!
A good accountant knows that their client doesn't always know what the
correct question is.
 
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M

Martin

Tim said:
The OP only asked about Input VAT (and only a specific question about
that) - if we'd also mentioned Output VAT, then Martin would complain
about
us answering more than just the question asked ... !!
Tee Hee.

(Though to be fair, my observation (for 'twas scarcely a complaint) was not
that you or RR answered a different question, but that you didn't answer the
one that was asked.)
 

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