CMag started this topic @ 15:34 on 13/11/2007
I've been running a small business for two years, but without even covering costs, let alone making a profit (it takes a long time to build up a client base).
I paid about £3k initially for equipment to setup and have been paying rent + VAT for the last two years.
I am about to go for voluntary VAT registration but am confused by the registration date. I know I can reclaim input VAT on goods for 3 years and services for 6 months prior to registration, but is that prior to the actual registration or the registration date that you request yourself on the VAT1 form?
i.e. if I request a registration date of June 2006 can I reclaim VAT on the rent from the beginning of 2006?
RE: VAT Registration Date and reclaiming VAT on services
miketombs | 13/11/2007 08:43 PM
It's prior to the effective date of registration, i.e. June 2006 if they accept the backdating.
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Mike Tombs
TaxAssist Accountants
www.taxassist.co.uk/dudley
RE: VAT Registration Date and reclaiming VAT on services
James Smith | 14/11/2007 08:49 AM
Its a tricky decision to make - don't forget that if you backdate your application you will need to then pay over VAT on your sales during the period you are now VAT registered for. Some VAT registered clients may allow you to bill this extra and reclaim it on their returns, but most wont want the bother, and non-VAT registered customers clearly wont pay any extra leaving you to foot the bill. Ie you may well be worse off trying to backdate - it depends how much your sales are and how much VAT is available. It may be sensible just to do it from now going forward and reclaim the 6 months rent and the equipment.
On a wider note if you have been running 2 years at a loss, is there any benefit in your business being registered right now? Ie will adding VAT to your prices mean you actually make even less money going forward? Or are your customers all VAT registered and wont care?
Hope that gives you something to think about.
Regards,
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773
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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: VAT Registration Date and reclaiming VAT on services
CMag | 14/11/2007 02:54 PM
Thanks 
Customers are all VAT registered so wouldn't care, but there were so few sales in the period (mostly loss-leaders) that the input VAT greatly exceedes the output VAT and it would be worth my while to stump up the VAT on the sales myself.
