Claiming VAT on pre-registration purchases.

[Eavebs]

Hi, I own a small Building company dealing with small to medium size projects eg. Loft conversions, extensions etc. Previously I mainly concentrated on the smaller jobs so have always remained below the VAT threshold however as I have now gradually got bigger I am forced to become VAT registered. I have been doing a lot of research and reading about pre-registration purchases and how for newly registered businesses we are able to use our first VAT return to claim back the VAT on purchases and goods over the past 4 years and Services over the last 6 months!? I think I understand what is meant by services but my question is regarding “purchases and goods”. What would come under this category? Materials? Tools? Fuel?

If anybody could make this a little clearer it would be greatly appreciated 

Thanks
Luke

[Spidersong]

Goods are basically anything you buy that aren’t services. So materials, fuel, tools, vehicles, books, furniture, uniform, storage boxes, plants, etc. etc. If you can pick it up, kick it, sit on it, or throw it it’s goods!

Remember that to be able to recover VAT on goods they not only need to have been bought in the last 4 years, but you still have to own them at the date your VAT registration begins, so bricks you’ve already used in previously invoiced jobs won’t have any VAT claimable, bricks sitting in your yard you can. So you may need to do a stock take as on the day you register in order to apportion any prior bulk purchases.

The basic premise of VAT recovery is that you can only recover VAT on things you’ve bought where you’re going to be using those things to generate income that you’ll be charging VAT on.

[Eavebs]

Hi, Thank you for the quick reply buddy. So any tools and equipment or clothing that I currently still have and use/wear in my job can be claimed back. But as I am s small Building company..as you can imagine I purchase my materials as and when needed and only what I need and these get used and so I don’t keep stock as such. So am I right that back dated VAT on materials previously used to create a product cannot be claimed as I no longer physically own the original product? And again, thinking along them lines…fuel purchased 4 years ago I would no longer have and would have been used the same as if for example timber purchased would then have been used to construct a roof? Along with screws, hangers etc. Etc.

Thanks
Luke

[Spidersong]

Yes. Fuels you purchased four years ago has almost certainly been consumed so no claim on that, anything you’ve already incorporated in jobs that you’ve finished/invoiced before you registered then no claim on those either.

Basically if you could go out and see it in your yard / van / hand on the day your VAT registration began/begins then you can claim for it otherwise you can’t. Also as I said before if you bought a bulk of 500 bricks for say £500 plus £100 of VAT then if on that day you’ve only got 100 (1/5) of them left then you’d only be able to claim £20 (1/5) of the VAT you we’re charged for them.

[Author]

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