View Full Version : Reclaiming Vat
DAVE33
4th May 2010, 17:34
I Bought A Pub 4 Years Ago Which Was Vat Registered.
I Have Just Being Doing Last Years Accounts And I Have Discovered That My Turnover Is Under The Vat Threshold For That Year. As I Have Already Paid Over The Year Under The Flat Rate Business Scheme, Am I Now Able To Claim This Vat Back And De Register.
I Bought A Pub 4 Years Ago Which Was Vat Registered.
I Have Just Being Doing Last Years Accounts And I Have Discovered That My Turnover Is Under The Vat Threshold For That Year. As I Have Already Paid Over The Year Under The Flat Rate Business Scheme, Am I Now Able To Claim This Vat Back And De Register.
No, you cannot backdate a de-registration.
If you bought the pub, were you charged VAT on the purchase?.
Usually pubs are sold as a Transfer of a Going Concern and it is a mandatory requirement that the buyer be VAT regsitered if the seller is VAT registered. If so, VAT would not have been charged on the purchase.
If it was not a Transfer of a Going Concern, it would have been subject to VAT and if you were not VAT registered at that time, you would have been unable to reclaim the input tax on that purchase - so be careful what you wish for as you may end up being unregistered for VAT but with a large clawback to pay to HMRC.
You need to talk to your accountants about this one as pubs can get messy (both literally and from a VAT perspective) and I'm also a little surprised you are on the Flat Rate Scheme becuase this means you cannot reclaim any input tax on landlord rents, beer purchases and general overheads (utilities, equipment, etc) which must be huge for a pub and so I wonder if the Flat Rate is actually any good for your business? - Something else to ask of the Accountant.
As Zeno has said, you cannot undo your VAT registration, you can cancel it but you cannot backdate that cancellation.
David Richards
5th May 2010, 17:50
I'm also a little surprised you are on the Flat Rate Scheme becuase this means you cannot reclaim any input tax on landlord rents, beer purchases and general overheads (utilities, equipment, etc) which must be huge for a pub and so I wonder if the Flat Rate is actually any good for your business? - Something else to ask of the Accountant.
The rate for pubs is only 6%, making the Flat Rate VAT scheme very attractive for small pubs. But (as you mention) it's worth checking with an accountant, as every business is different.
I was just thinking that if the turnover is less than £70k then that is quite small and the FRS may or may not be appropriate for the trade, depending upon what sort of sales they have and what level of expenditure there is. Other factors like not having to pay rent comes into play as well of course.
6% sounds good but there's a lot of overheads for a pub which are fixed/constant regardless of the income levels, I just wanted the OP to make sure the scheme was still appropriate - as indeed, anyone on the FRS should do periodically.
elainec100@cheapaccounting
6th May 2010, 09:56
Gosh a pub with a turnover of less than £700 - less than £200 / day in turnover. Can that really cover the costs of having it open & someone serving all day?
I don't trust the Flat Rate Scheme (more specifically, I don't trust that HMRC will not retrospectively withdraw it for some people).
Clients providing labour only services of the manegment consultant/IT consultant type - say £80k - £120k invoices at standard rate with no inputs to speak of can make a fair bit of money out of this scheme year on year. Swings & roundabouts I suppose but it does not seem like HMRC to let it go especially when in my experience it is only those who save money who use it (the reduced record keeping rubbish does not come into it).
David Richards
6th May 2010, 13:33
I just wanted the OP to make sure the scheme was still appropriate - as indeed, anyone on the FRS should do periodically.
I agree.
In fact we've even built some functionality into our software, to help people keep an eye on whether or not the Flat Rate VAT scheme is saving them money. When running a VAT return, the program compares the amount of VAT due with the amount that would have been payable under normal VAT rules.