Food & VAT

[lositom]

I have only ever run small businesses under the VAT threshold so have never completed a VAT return and for these particular businesses, it has not made sense to register voluntarily.

However...

I am in the process of setting up a food business which produces frozen foods/meals and am under the impression that with the products being zero rated for VAT, if I register for VAT I can claim back the VAT I've paid on expenses etc. (packaging materials, labels etc.)

Is this accurate? So if I buy say £1000 of supplies + £200 in VAT, sell the finished food at whatever price with zero rated VAT, when I complete my VAT return, HMRC will give me back the £200 I paid in VAT?

The company (a ltd company) has only just been set up and has not started trading but can I still register for VAT now and claim back any VAT on expenses, or is that only the case once HMRC has been informed that we have started trading?

Finally, having never completed a VAT return, is this something I can do myself? (like PAYE RTI for example) Presumable I offset VATable expenses against VATable outgoings (zero) and HMRC does the rest...?

Many thanks in advance for your help.

Tom

 

[Scalloway]

You can register for VAT at any time. However HMRC may want to look at your invoices if you have a big repayment in your first claim.

Accounting software generally can do your VAT return for you, You enter all your income and expenditure using a code to show what VAT rate applies. If you are confident about using the software you can do the returns yourself.

 

[lositom]

Many thanks for your reply.

If all the products I sell are zero rates (which is likely to be the case) will it matter that every VAT return will be a refund (or nothing if I've made no purchases)?

Also, as this is early days, it is unlikely that within the first (several) VAT periods, there will be any significant sales, if any at all (so turnover will be a lot less than expenses), would that affect my ability to claim back VAT on expenses?

Thank you

 

[kulture]

It is the same for a book shop. Every VAT return is a refund. It is however near certain that you will get a VAT inspection and thus vital that you have a good accountant to check over your sales to confirm that they are indeed zero rated.

 

[Discdevil]

If your product you are creating is Zero rated tax then you can claim back your input tax and still avoid putting VAT on your invoices. this is the distiction from exempt products as you cant claim your input VAT from your supplies.