Please help with VAT!

[UK2004]

Looking at wholesale lists, has the distributors price and the RRP, should the RRP normally include VAT, I know that the wholesale price doesn't that's added on with the bill.

When I buy say 5k of stock from distributor they add on VAT< can this VAT be claimed back or is that not possible?

For example some items are 200 pounds ex vat and have RRP of 240 pounds, if you aren't getting the VAT back once VAT registered then surely impossible to make profit is it that the distributor are overcharging and price needs strict negotiation?

Surely if something is RRP 17 pounds I should not be apying 14 pounds plus VAT my profit will be pitance after credit card charges!

Help appreciated!

[Jayne]

If you are VAT registered, you have to charge and pay VAT.

If you are not VAT registered, you still pay VAT on purchases, but you do not charge VAT to your customers.

The RRP is only a recommendation, you can ignore that. You do not charge VAT to customers, if you are not registered for VAT.

Jayne :D

[crus]

Bang on,

also you can claim back the VAT on setup costs, ie everything you buy for 2 years, i think, before you register. However on the margins ypou are quoting I would have a word with your supplier as these look like prices to put small buyers off. If not, take your business elsewhere.

D

[creacom]

Bang on,

also you can claim back the VAT on setup costs, ie everything you buy for 2 years, i think, before you register

Its not 2 years for everything. See what Alpha told everyone about that here :

http://www.ukbusinessforums.co.uk/ftopic2401.php

Jacqui

[crus]

Thanks Jacqui,

I thought it might have been covered on here before ;-)

D

[UK2004]

Says on that thing stock items purchased you can claim VAT back, so does that mena that the goods that I sell on I can claim the VAT back?

The most important thing I am trying to work out is this issue of whether I can claim back the VAT on he goods that I resell on to the consumer?

[creacom]

Are you registered for VAT already ?

Imagine I buy goods or services and they charge me £20 VAT on that. Then I sell goods and services and I charge my client £10 VAT on that. So in the end the VAT office would owe me £10 ! My income VAT is less than my outgoing VAT.

Now IF I charge £20 for the serices that I sell and then my supplier charges me £10 then I owe the VAT office £10. My income VAT is more than my outgoing VAT.

Do you see the difference ?

Take a look here too at the VAT website :

http://www.hmrc.gov.uk/businesses/index.shtml

Jacqui

[UK2004]

Thanks Jacqui but I'm not 100% with you...???

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_Home

First para there says tax on final consumption so surely me buying goods from wholesaler I should get the VAT back.

I'm not registered for VAT yet but parents business is they use professional services people for their business as it's quite large so they aren't good at explaining to me, there business is totally different too!

[creacom]

You would only get VAT back IF

You are registered for VAT. If you are not then you just have to pay it and you get nothing back.

AND

You have paid out more VAT ( from buying things ) than you have charged clients for your services or products ( from selling things )

Hope it helps

Jacqui

[UK2004]

Ahh it's becoming clearer, for anyone also wandering the thread below has really good explanation:

http://www.ukbusinessforums.co.uk/ftopic9005.php

Thanks Jacqui you set me on the right road!

[UK2004]

Forgot to add, crus, do you know how I go about claiming back VAT on business expenses in the time prior to going VAT registered?

I presume for a start I better start keeping all these receipts!

[Jayne]

Alpha or Joy on here would be the best ones to ask about claiming VAT back :D

Jayne

[Joyous]

I'm sure pre-registration expenditure came up recently.

Anyway, the general rule of thumb is three years for goods and six months for services.

The goods must be on hand at the date of registration and they must have been bought for with the intention of using them in the VAT registered business. Other provisos also exist for goods and services.

It is essential that you keep the relevant VAT receipt.

You claim the VAT back on the first VAT return after registration (although if the Revenue are in a good mood you can reclaim it up to three years later but I wouldn't push my luck).

Regards

Joy