VAT enquiry for SME startup

[daptone]

Is it be possible for a mobile trader to register for VAT upon startup, claim a return on VAT paid for a van but still avoid further contributions for that year because turnover was less than £70k?

Thanks.

 

[nickjohnston]

Seems all above board to me daptone. You'd be registering voluntarily, filing a return, and simply not filing further returns. Or, you could continue filing returns on a voluntary basis.

 

[GillespieBS]

If you register for VAT, you can fill in your first return which may well show a refund. HMRC will want to make an enquiry into the refund to satisy themselves that it is bona-fide.

I think the second part of your question refers to whether you can avoid adding VAT to your sales invoices. Unfortunately not. As you are registered you must charge VAT on your sales too unless you deregister.

 

[bovine]

Ref nicks post, No, thats not right. If you register for vat, you have to charge vat. If you charge vat, you must hand that over to the revenue.

Below the threshold, you have the option to register. If you choose to, then you must files returns and you must pay the Vat!

 

[nickjohnston]

You can deregister for VAT voluntarily if you're under the threshold...

http://www.businesslink.gov.uk/bdotg/action/layer?topicId=1074421793

 

[daptone]

Thanks for the advice.

Any chance of claiming VAT back 1st quarter on a van for and then de-registering if I dont turnover £70k that year?

For what its worth Im looking at starting up a mobile deli so from what I'm aware (and I'm still learning), I won't have to pay VAT for cold goods from my supplier and I won't charge VAT on my cold produce.

 

[3pic]

You may have to account for VAT on some of your business assets and stock on hand depending on what they are, how you obtained them and why you are cancelling your registration.

You will not have to account for VAT if the total VAT due on the assets would be £1,000 or less.

So if you buy an old 2nd hand van, costs less than £6kish and you don't buy any other assets, stock or goods, then in theory you can register for VAT, claim VAT on van, make no other sales in that quarter (or if you do, they are going to be subject to VAT), then de-register for VAT.

If you have assets where the VAT is over £1,000 then you'd have to declare these on the de-registration forms and repay that VAT back to HMRC.

 

[Williams lester]

Thanks for the advice.

Any chance of claiming VAT back 1st quarter on a van for and then de-registering if I dont turnover £70k that year?

For what its worth Im looking at starting up a mobile deli so from what I'm aware (and I'm still learning), I won't have to pay VAT for cold goods from my supplier and I won't charge VAT on my cold produce.

In which case it may be worth staying registered. I have a client running a deli who is VAT registered and gets a repayment of VAT every quarter.

 

[3pic]

Thanks for the advice.

Any chance of claiming VAT back 1st quarter on a van for and then de-registering if I dont turnover £70k that year?

For what its worth Im looking at starting up a mobile deli so from what I'm aware (and I'm still learning), I won't have to pay VAT for cold goods from my supplier and I won't charge VAT on my cold produce.

If you are selling zero rated cold food then not being registered for VAT makes absolutely no sense at all, unless you are also intending to sell hot food and drinks.

 

[daptone]

This is interesting.

So it's possible I can register upon startup, claim approx £3k VAT on a van of £19k (inc VAT) after my first quarter, then only pay VAT on my hot products (coffees, warm paninis), but not on my sliced meats, cheeses, oils, vinegars, cold paninis etc?

 

[3pic]

This is interesting.

So it's possible I can register upon startup, claim approx £3k VAT on a van of £19k (inc VAT) after my first quarter, then only pay VAT on my hot products (coffees, warm paninis), but not on my sliced meats, cheeses, oils, vinegars, cold paninis etc?

I had a feeling the mobile van would cost a bit more than £6k!.

In essence, your sliced meats and cheeses would be zero rated, as would any sandwich/cold panino you sold, the hot panini's would be standard rated (although there is a technical argument to getting them zero rated as well but only worth the hassle with HMRC if you're Starbucks).

So you'd have to charge VAT on some things, not all. You'd have to weigh the extra cost to the csutomer against recovering VAT on your van fuel (which'd be high I'd imagine), cooking gases and other overheads (including buying in cans of drink for instance, etc).

 

[daptone]

Tried getting in touch with HMRC on VAT phoneline earlier but couldnt get through.

Do you think its possible for me to claim VAT back on my van, fuel and gas whilst only paying HMRC VAT for my hot produce (which would be minimal) and not on any cold food/drink products?

That would definately help!

 

[3pic]

You need to read HMRC Notice 709/1

(http://customs.hmrc.gov.uk/channels...ntent&propertyType=document&id=HMCE_CL_000160)

Cold food that is taken away (not eaten in) in usually zero rated. This means you ARE charging VAT, just at 0% and so this entitles you to reclaim input tax without increasing the price of your product.

If you didn't charge VAT at all (ie, not VAT registered) then you'd have no entitlement to reclaim your input VAT on purchases, etc.

So to answer your question, HMRC would have no problem with you registering for VAT, reclaiming VAT on a van/overheads and only charging/paying over the VAT on hot foods and any beverages - but read the Notice as it gives more details as to what can and cannot be zero rated.

 

[daptone]

Thanks again 3pic.

Just got through to HMRC on telephone and if I understand things correctly I can register upon setup to reclaim tax paid on the van and equpiment and every quarter I only pay HMRC any VAT from sales of hot produce which is a small part of my business and I don't charge or pay VAT on any of my cold produce which is where I see the bulk of my turnover coming from.