VAT question

[Copestake]

I'm looking to start up a business in my spare time, I wont be earning near the VAT threshold but i'm thinking it will probably be worth becomming VAT registered while as I will have to buy alot of equipment to start and can claim the VAT back.

I doubt i will be getting much work for the first year, is there anything I will need to look out for?

Also can you buy items before being VAT regisitered then claim back once you are?

Thanks

 

[MyAccountantOnline]

Hi

Its not wise to base a decision solely on the VAT you can claim back on equipment you have to buy when you start.

You need to bear many factors in mind - one of the most important being whether your customers/potential customers will be VAT registered.

Have a chat with your accountant so that you can consider all implications if you have one.

You can claim VAT back on equipment held at the date you register if its bought before you register.

 

[Copestake]

I will be hoping to deal with businesses so I imagine the majority will be VAT registered.

I just dont want to claim back thousands in VAT and not sell much business and get investigated for fraud

 

[MyAccountantOnline]

I will be hoping to deal with businesses so I imagine the majority will be VAT registered.

I just dont want to claim back thousands in VAT and not sell much business and get investigated for fraud

If the majority of your customers will be VAT registered you will probably be best to register when you commence in business.

The flat rate scheme may be worthwhile depending on what business you are operating so do have a look at that as well.

 

[spidersong]

So long as you are properly intending to trade, then you wont be looked at for fraud even if you recover thousands on equipment and only manange to make a fivers worth of supplies.

They may look at you to check you had a reasonable expectation to trade, and so long as you've tried to trade there's nothing to worry about.

As a side note you should be aware that any VAT you incur on services (which includes construction services; if someone does shopfitting for you they've provided a service. Even though you end up with bricks, shelving, windows etc. it's all still a service) is only recoverable in the six months prior to your date of registration.