Retrospective VAT claim after registration - purchases vs sales

[Midlands3D]

Hi
I'm looking at voluntarily registering for VAT as much of my sales are likely to be B2B and because I have the potential to claim back quite a bit of vat from circa £10k of purchases to start trading over the past few months. The return on an initial claim, since my investment to date far outweighs my sales, would be a welcome injection of cash.

My question is:
I understand I can claim the VAT back for all related purchases (so long as I have proof) for the past 4 years.... not a problem as pretty much all purchases I still have invoices for and are within the last 6 months, but what about declaring the sales I've made in the same period? None of them have itemised VAT on the sale and are a mix of online sales via sites like eBay and specialist sites like 3DHubs, and direct B2B sales where the invoice provided doesn't itemise VAT. Do I have to declare those sales on an initial VAT return or is it simply a case of claiming for the vat on the purchases made (ignoring the sales) before VAT registration and then purchases AND sales AFTER registration for subsequent quarterly VAT returns?

 

[MyAccountantOnline]

Hi
I'm looking at voluntarily registering for VAT as much of my sales are likely to be B2B and because I have the potential to claim back quite a bit of vat from circa £10k of purchases to start trading over the past few months. The return on an initial claim, since my investment to date far outweighs my sales, would be a welcome injection of cash.

My question is:
I understand I can claim the VAT back for all related purchases (so long as I have proof) for the past 4 years.... not a problem as pretty much all purchases I still have invoices for and are within the last 6 months, but what about declaring the sales I've made in the same period? None of them have itemised VAT on the sale and are a mix of online sales via sites like eBay and specialist sites like 3DHubs, and direct B2B sales where the invoice provided doesn't itemise VAT. Do I have to declare those sales on an initial VAT return or is it simply a case of claiming for the vat on the purchases made (ignoring the sales) before VAT registration and then purchases AND sales AFTER registration for subsequent quarterly VAT returns?

You only charge VAT on sales from the date of registration onwards.

 

[Midlands3D]

Yes, I know that....I'm asking about reclaiming the VAT on purchases made before becoming voluntarily registered for VAT. I don't currently charge VAT on the sales I make (I'm not registered yet) so my question relates to what I would submit after becoming registered in order to make the most of the ability to reclaim VAT on purchases made. I believe the limit is 4 years prior to becoming vat registered?

 

[MyAccountantOnline]

In that case have a read here it explains what you can claim on purchases made before registration

 

[Midlands3D]

Ok so if I'm reading that right, I ignore any sales made in the periods the purchases were (up to 4 years ago) and in my first vat return I can claim for purchases in that qtr plus the previous 4 years against the sales (where I will have now charged vat) in the quarter the vat return relates to?

 

[UK Contractor Accountant]

you can only claim vat for the previous 4 years on stock that you have in hand at the date of vat registration not the whole lot!

 

[MyAccountantOnline]

The reasoning behind it is that you can claim VAT on purchases you've made to make sales on which you are charging VAT.

 

[Midlands3D]

ok great, so that adds a little more complexity to the claim but not too much. I have a mix of machinery purchases and raw materials. The machines will be easy enough since all the vat should be claimable. Some of the raw material purchases I'll have to write off as I've used them, but others will be more awkward. In the main, the raw materials are reels of plastic and some of them will be part-used. Could I take a percentage of the purchase price based on what is left 'in stock' on the reel?

 

[Chart Accountancy]

You cannot claim VAT incurred on goods which have been completely used up before registration.

In order to claim VAT on raw materials that are still not used, as reading from the VAT notice, you will need to compile a stock account of the goods - this must show the quantities of goods and the dates when you obtained them, and if you used any goods to make other goods, or disposed of them after you were registered for VAT, the account must give details, with dates. Therefore, you should be able to allocate VAT on the raw materials that have not been used. However, if the amount is not material, you may not want to do this as it will invoice detailed calculations to be able to justify the VAT claim.

With regard to your first VAT return, you will just declare the eligible VAT on your purchases from pre-registration plus VAT on purchases within your first VAT period. With sales, you only charge VAT from the date of your registration. The difference between total VAT on purchases and VAT on sales will be your net position for your vat period.