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You can generally reclaim VAT on goods you bought up to 4 years before you registered for VAT and services you bought up to 6 months before you registered as long as the following conditions are met;
The goods were bought by you as the entity that is now registered for VAT
The goods are for your VAT taxable business purpose
The goods are still held by you or they have been used to make other goods you still holdYou cannot reclaim VAT on these goods;
Goods that you have completely used up before you registered for VAT (e.g. petrol, electricity or gas)
Goods that you have already sold or supplied before being VAT registered
Goods that relate to supplies you make that are exempt from VATIn that case i do not understand how he could have claimed expenses if the goods are still inventory? if this was a mistake, then corrections could be made to the returns.
Hi Josh – i hope this link will help you: https://www.gov.uk/starting-to-import/moving-goods-from-eu-countries
Hi Claire. if you wish to claim any VAT you have to be registered with VAT HMRC office.
if you provide only services to America – your sales are outside the scope of UK VAT, so there is no obligation to register for VAT in UK. However, you can register for VAT voluntarily. Once registered then you can claim VAT charged on you but you have to weigh the benefits of registering voluntarily with the regulatory obligations of filing the returns every quarter.
Hi Richard, im here to help.
The supply of website design, video production of online recordings including services which are delivered over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, are considered ‘electronically supplied services’ for VAT purposes.
The supply of electronically supplied services is a ‘taxable’ supply subject to VAT if the place of supply is in the UK and is outside the scope of VAT if the place of supply is outside the UK and EU.
The place of supply for electronically supplied services is where the customer uses or consumes the digital which is normally the country the customer resides or has a permanent address. Therefore, a good record keeping system should be in place to determine the location of the consumer.
The place of supply for electronically supplied services to individuals is determined as follows:
(i) resident in the UK means the place of supply is the UK (UK standard rate of 20% applies)
(ii) resident in the EU, means the place of supply is the UK (VAT rate of the customer’s EU member state should apply)
(iii) resident outside EU, the place of supply is outside EU (no UK/EU VAT is charged)The place of supply for electronically supplied services to individuals is determined as follows:
(i) resident in the UK means the place of supply is the UK (UK standard rate of 20% applies)
(ii) resident in the EU, means the place of supply is the UK (VAT rate of the customer’s EU member state should apply)
(iii) resident outside EU, the place of supply is outside EU (no UK/EU VAT is charged)
The place of supply for electronically supplied services to businesses ie B2B to:– business EU country, place of supply is the EU country, therefore zero-rated.
– business resident outside EU, the place of supply is outside EU (no UK/EU VAT is charged)The key issue is to:
- check if the services/products qualify as electronically supplied services
- check if your customers are individuals or businesses
- know where your customers are resident
Quick guide to completing a VAT Return
These are the boxes of the VAT return that you will be asked to complete when you submit your VAT return online:
Box to be completed
Comments
Box 1
To calculate the output VAT that is due for a period, the first step is to identify the total sales. The second step is to calculate the VAT. The total is divided by six – this amount is then entered into Box 1.
Box 2
Box 2 is only used if items have been bought from other EC (European Community) countries, the figure will be taken from purchases, not sales. Multiply any purchases by the rate of VAT (20%). Often this box will be £0.
The treatment of items included in this box may be affected by the UK leaving the EU.
Box 3
Box 3 is the sum of Boxes 1 and 2, it is automatically calculated when the return has been completed.
Box 4)
The general rule is that VAT can be reclaimed by businesses on goods and services bought by the business that has been charged by the supplier, as long as the business makes standard, reduced or zero-rate supplies. Box 4 is the amount of VAT reclaimed from purchases and other expenses (input VAT). If any acquisitions from EC member states were included in box 2, this amount must also be included.
Box 5
Box 5 is the difference between boxes 3 and 4, it is automatically calculated when the return has been completed.
Box 6
Box 6 shows the total value of net sales for the period (excluding VAT). Do not include pence. This is calculated by subtracting the total sales from the VAT.
Box 7
Box 7 shows the total value of net purchases and expenses for the period (excluding VAT). Do not include pence.
Box 8
Box 8 shows the total value of net sales (goods only) for the period (excluding VAT) to other EC member states. Do not include pence. This box is often £0.
Box 9
Box 9 shows the total value of net purchases for the period (excluding VAT) from other EC member states. Do not include pence. This box is often £0.
The treatment of items included in this box may be affected by the UK leaving the EU.
All varieties of leaf tea, powdered instant tea, and tea bags are zero rated items.
If you are selling a tea with other items that are standard rated then it becomes a mixed supply and you need to assess:
1. What is the main supply and whether the rest of the items sold are ‘incidental’ items, which can be ignored. In this case the VAT rate of the products will be based on the main supply.
2. If the customer clearly expects to receive both items in return for their payment, each subject to different rates of VAT, the VAT tax must be apportioned/charged separately.
Hi,
You should be able to reclaim VAT on anything you bought for “business” while still VAT registered as that is written in statute. The capital goods scheme – whereby VAT on assets claimed is adjusted over 5 years or 10 years but only applies to individual items costing at least £50,000 (excluding VAT) and anything else is reclaimed in the usual way, hence the first HMRC officer is wrong.
However in as much as you want to claim input VAT, when you deregister you are treated as if you have sold all the stocks in hand and hence output VAT is chargeable of the deemed sales price. Whilst you can claim the £2k input VAT, you should also account for any stock and other assets you have on this date if (1) you had claimed input VAT when you bought them (2) the total VAT due on these assets is over £1,000.
So in your case, i would think the net benefit is nil.
If there were no such rules, businesses would register for VAT and claim input VAT on major purchases and deregister immediately.
Hope this helps.
Hi DD
Where someone sells your works to ultimate customers and he charges you commission ie three parties involved in a transaction, is arguably one of the most complex area of taxation as it requires an agency agreement that is VAT compliance and watertight.
I would suggest to get in touch with a local VAT expert and he will go through the agreements in place and assess the VAT implications and advise on the correct treatment.
If something goes wrong, HMRC always review the commercial agreements in line with what happens on the ground before they can make an assessment.
Hope this helps
Hi Jazb
The DIY Housebuilders Scheme allows you to reclaim some of the VAT that you have paid out for your project if you are converting a non-residential building into a new dwelling ie a qualifying conversion. You can check para 7 here https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708
However, this is a complicated area and my suggestion is to find a local VAT expert who will look through the paperwork and check all is robust before thinking of getting a reduced rate on the conversion.
Regards
Services and (Ibuidling material provided together with services) provided in the course of construction of a zero-rated building are zero-rated. You need to be sure that the various conditions are met eg this was a complete demolition and no retention of walls etc.
Look at the VAT notice on Building and Construction for details: https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708
If you charge the wrong rate and say zero rate and HMRC says its 20% you fork the difference to HMRC hence its important to cover yourself through a contact/ contacting HMRC or ask client to get a VAT expert to provide written advice etc.
Domestic building work, including repair, maintenance, and improvements are usually charged at the standard rate of vat – 20%. There are several circumstances in which VAT on building works is charged at a reduced rate or even zero-rated.
In your case VAT is at reduced rate of 5% only if residential property was empty for at least two years. With effect from 1 January 2008, renovations and alterations to residential properties that have been empty for at least 2 years will be eligible for a reduced VAT rate of 5%. This applies to labour and materials associated with repairs, alterations, construction of associated garages and hard landscaping.
No VAT reduced rate for materials on their own. To get the reduced rate on materials, they have to be supplied with the services.
The VAT rules are that place of taxation (for VAT purposes) is determined by (i) where the services are supplied and (ii) status of the customer receiving the service i.e. whether a business or consumer.
The place of supply for business to business transactions (B2B) is the place where the business customer ‘belongs’. Hence services to EU businesses, the place of supply is where the business customer ‘belongs’, hence VAT should not be charged to all EU businesses.
The place of supply for business to consumer transactions (B2C) is the place where the supplier ‘belongs’ irrespective of the location of their customer. Hence the place of supply for services to EU customers is UK and VAT should be applied regardless of the location of the customer. Please note B2B (Business-to-business) means commercial transactions between businesses and B2C (business-to-consumer) means transactions between a business to natural persons/private individuals. Also note services to EU businesses that are not VAT registered are counted as a consumer.There are range of suggested wording to be included on your invoice including your vat number, customer vat number. You can annotate the invoice, ‘reverse charge supply,’ or if you want to be more legal-sounding, you refer to the EC VAT Directive 2006/112/EC.
In your case you may simply reissue the invoices and issue credit notes; and explain to customers.
