Vat Advice?

[scribblesvurt]

Hello,

I am running a computer repair company that also provides training to the local Authority. I would say that 70% of income comes from training and the other 30 from computer repairs for the public. We will turn over approx £50K this year.
I am trying to decided if it is worth our while registering for VAT. Obviously we would need to factor it into the cost we charge the public for services but we also buy quite allot of parts and equipment so we would be able to claim the VAT back on those right?

Any help much appreciated.

[David Richards]

Yes. you would be able to reclaim VAT on things that you buy, where they relate to taxable supplies that you make. And that's the complicated bit, certain types of training are exempt from VAT - and you won't be able to reclaim VAT on things you buy that relate to exempt supplies.

The rules on whether your training is classed as exempt are a bit complicated; a lot depends on what type of business you are (sole trader/partnership/limited company), what sort of training/education you provide and who ultimately funds the training. VAT Notice 701/30 (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000117) has all the gory details, but you should also speak to your accountant. They will be able to advise you regarding your specific situation and be able to tell when if it is appropriate to register to VAT voluntarily now, or wait until you reach the mandatory registration threshold.

[scribblesvurt]

Ok so looking at that, I am not an eligible body and:

"if you’re not an eligible body (see section 4), your vocational training is exempt to the extent that it is funded under an approved Government funding scheme (see section 13)"

Our services are paid for by the Local Authority. I don't think it comes from any scheme though so it looks like we are not exempt.

[robindunne]

Have you looked at the flat rate VAT scheme. Maybe have a word with your accountant about that as it could prove to be beneficial.