VAT Input query

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morory7
morory7 Registered Posts: 6
edited March 2016 in VAT
Hi, Our company took a 10 year loan out to refurbish part of our building into a Nursery. The loan covers all the expenses such as building and equipment. I have a basic tally spreadsheet for the Manager in charge so she can monitor what she is spending. This is inclusive of VAT, whereas in the monthly accounts is net of VAT. We are VAT registered and the Nursery will be part of our accounts and company. We do have partial exemption as we deliver funded training IT courses as our main work. As the VAT on Nursery purchases has been included in the VAT returns, my Manager now wants the VAT back to spend on the project. I understand her logics, but not sure this is correct. Can anyone advise me if this is possible, if so, as we are partial exempt, should I use the annual adjustment percentage. Also, if she does have the VAT back to re-spend, what if she makes more VAT purchases, will it ever end????? She is a very persistent lady, so I need some good strong advice.
Many thanks

Maureen Silver MAAT

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  • morory7
    morory7 Registered Posts: 6
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    Thank you for your reply. The Loan was taken out to to convert part of our building into a Nursery and to purchase all equipment. To assist my manager on her spending I created a basic spreadsheet, therefore an invoice inc VAT would show that she has spent £120. In the actual accounts it would be a £100 debit in expense and £20 to Input VAT.
    As the £20 input VAT is reclaimable, can she increase her overall spending by £20??
    Since the middle of last year, I have shown her how much she has left to spend less Gross Purchases.
    She is now questioning where the VAT is, this is reclaimed on our VAT returns which are done quarterly, therefore she now want the VAT back to spend.
    Hope this makes is clearer.
    Many thanks
  • morory7
    morory7 Registered Posts: 6
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    Thank you, how do I best explain to her that VAT is not a recoverable expense, she is a very inquisitive and matter of fact lady. Lol

    I do have a separate code in P & L for Nursery Expenses, but she likes to know on a weekly basis and the accounts are not always complete by then.

    Thank you again for your help in this matter.
  • morory7
    morory7 Registered Posts: 6
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    Hi, Ignore my last post, I was rushing before lunch and not really thinking. I understand that all her expenses are net - therefore any reclaimable VAT is not included in her totals left to spend.
    Many thanks for all your help.
    :)

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