VAT on assets before registration

lizzy

Does anyone have an thoughts on the following:

A partnership buys a van £6000 inclusive of VAT but it is not reclaimed as they are not VAT registered. After a few months the partners go their seperate ways and one carries on as a sole trader giving the other partner £2000 for the van.

The sole trader then becomes VAT registered. What amount of VAT can the sole trader claim on his first return?

Any comments greatly appreciated.:001_smile:

BIG WAL

If I understand the situation correctly, as no VAT has been charged on the purchase of the van by the sole trader, (and it could not be as the original partnership was not VAT registered), there is nothing to be reclaimed.

Poodle

Hi Lizzy,

He may be able to claim 50% of the input VAT on the £6k van purchase if the £6k invoice had both partners name on it because this was the amount of his interest in the purchase. But I would double check with the vat man first though. When you phone the helpline they will give you a reference number that you should keep with your clients records to support your actions.

The second payment represents his purchase of the other 50% interest and as he purchased from his partner who was not VAT registered then I would guess that there would be input VAT claimable there.

Bit of a guess though

Poodle