Newly VAT Registered

Moobag
Moobag Registered Posts: 59 ? ? ?
I have a client who has hit the VAT threshold so has registered for VAT. He was asking me the other day about what purchase invoices he could claim VAT back on.

basically he is vat registered from the 1st Feb 2013, he is raising an invoice to his client dated 5th feb 2013, however a lot of the stuff he is invoicing for si dated before the 1st feb 2013.

He has all VAT invoices with regards to any of the goods and services that have been provided to him with regards to the invoice he now wants to raise.

he is a builder and had built an extension for a client, most of the work has not attracted VAT as he wasn't VAT registered but now he is he is stuck.

I feel that reading the HMRC guidelines that he can go back upto six months with regards to goods and services as long as you have any relevant paperwork, so this is what I would advise him to do.

any purchase invoice that relate to this latest sales invoice which needs VAT charged onto it will be able to be reclaimed when doing the VAT return.

Any advice greatly appreciated.

Thanks

Comments

  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    Hi Moobag,
    I am not an expert on Vat but I have just dealt with a client in a similar situation this morning so thought I'd give you my thoughts:
    HMRC says he can back claim 6 months on services and up to 4 years on goods as long as they were bought for the business which is now VAT registered.

    Services include for example VAT on accountancy fees and costs relating to business premises (in the case of my client we have allowed VAT on business mobile phone, lease on the van and our fees for the previous 6 months).

    For the goods you can claim as far as four years as long as the goods are not used up or still in the business at the date of registration. So if your client has a van (asset) or tools still in use he can claim the VAT back on it.
    In your case, I think your client could also claim VAT on goods (stock) he bought before registration that were not all used up by the time of registration. In the case of an on-going building project I am not 100% sure how it will be dealt with (maybe others will have some ideas?)

    I hope this helps a bit, but please wait for more expert advice!
    MN
  • JodieR
    JodieR Registered Posts: 1,002
    In your case, I think your client could also claim VAT on goods (stock) he bought before registration that were not all used up by the time of registration. In the case of an on-going building project I am not 100% sure how it will be dealt with (maybe others will have some ideas?)


    MN

    I would say that up until your client has invoiced their customer for the job, all supplies purchased from the builders merchants will belong to your client, and therefore at the first day of registration he owned those supplies and therefore he can claim the VAT back on them. I can't see how it could be seen any other way.
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