Claiming back VAT on gifted stock.

Discussion in 'Accounts & Finance' started by Sobie, Jul 30, 2019.

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  1. Sobie

    Sobie UKBF Regular Free Member

    331 50
    Hi All,

    My mum closed her business and gifted her stock to my step brother so he could open a new business (as he was her employee).

    My mum has paid back the VAT owing on the stock she had left.

    Can my brother reclaim the VAT through his business on this stock even though he didn't actually pay for the stock?

    Thanks,
    Rachel
     
    Posted: Jul 30, 2019 By: Sobie Member since: Jul 27, 2008
    #1
  2. spidersong

    spidersong UKBF Newcomer Free Member

    288 110
    No, VAT is equal to 20% of the consideration (whether money or quid pro quo) received for something. Your mum didn't receive consideration so there's no VAT.

    Also by the sound of things when the stock transferred she wasn't registered for VAT so she couldn't have charged him VAT, and HMRC themselves haven't charged VAT, so again no VAT to claim.

    There have also been some tribunal cases where someone who paid over VAT to HMRC on deregistration then reregistered whilst still holding the same assets/stock and tried to reclaim the VAT they had paid over. The courts on that one gave it a big thumbs down.

    I'm afraid you can't generate something from nothing here.
     
    Posted: Jul 30, 2019 By: spidersong Member since: Aug 20, 2008
    #2
  3. Sobie

    Sobie UKBF Regular Free Member

    331 50
    My mum was VAT registered, hence when she closed the shop she had to pay back VAT on this unsold stock. (which she had reclaimed on purchase of the stock).
     
    Posted: Jul 30, 2019 By: Sobie Member since: Jul 27, 2008
    #3
  4. Newchodge

    Newchodge UKBF Big Shot Free Member

    14,944 4,030
    Forget this is your mum and your brother.

    A new trader has received stock free of charge to sell at whatever profit they can make. They have not been charged VAT on that stock so, even if they, as a new trader, are registered for VAT, they cannot reclaim VAT as they have not paid any.
     
    Posted: Jul 30, 2019 By: Newchodge Member since: Nov 8, 2012
    #4
  5. Sobie

    Sobie UKBF Regular Free Member

    331 50
    Thank you, that's exactly how I see it too.
     
    Posted: Jul 30, 2019 By: Sobie Member since: Jul 27, 2008
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