New Client - Tattoo Studio

Vaioanimal10

Hi, I have a new client, its a tattoo studio (ltd co.), a couple of things I'm not sure on, probably very obvious and I think I've answered my own questions in my head a million times, but need clarification.

1) the tattoo machines have a lifetime guarantee, should I still be depreciating these

2) can they claim vat back on purchases, although they are not vat registered (turnover does not warrant vat registration yet)

Any guidance would be much appreciated, thank you

KernowAccountant

Vaioanimal10 said:

Hi, I have a new client, its a tattoo studio (ltd co.), a couple of things I'm not sure on, probably very obvious and I think I've answered my own questions in my head a million times, but need clarification.

1) the tattoo machines have a lifetime guarantee, should I still be depreciating these

2) can they claim vat back on purchases, although they are not vat registered (turnover does not warrant vat registration yet)

Any guidance would be much appreciated, thank you

1) Yes. Implicit in a "lifetime guarantee" is that they have a useful economic life.

2) If an entity is not VAT registered they cannot normally recover VAT.

MarieNoelle

On the question regarding VAT, they could register voluntarily but they would then have to charge VAT to their clients. It's for them to decide whether the amount of input tax recoverable is worth the loss of competitiveness.

If they reach the VAT threshold in the future they should be able to claim VAT retrospectively under certain conditions.

Buhir_the_Bookkeeper

In relation to claiming back Vat retrospectively you can claim goods and services historically once registered that are still in possession. There is information on the following HMRC Link that will explain this LINK HERE .

Also If the client was very busy and got to the VAT threshold, it may be worth the client looking at flat rate VAT if they do not purchase many goods and the most of their income is from the sale of services.

Again you would have to do a comparison if voluntary registered between the difference in input and output vat as standard rated and the amount of Vat to be repaid if using the flat rate scheme of VAT. As in the case of services Flat rate tends to be a better option. again please find more information on flat rate vat tax schemes at the following link HMRC LINK HERE


With thanks

Vaioanimal10

Thank you for your comments