Claim VAT on expenses with no sales yet...

Hi....am in the process of setting up a new business and have some expenses....mail, laptop, business travel etc. I don't expect to have any revenue for some considerable time so can I claim back the VAT element of the expenses in the absence of revenue ?

I am a sole trader and not yet registered for VAT but will be soon...

You can't claim VAT on any expenses paid before you have registered for VAT. You can however claim back the cost of these items (including VAT) as long as they are expenses incurred "wholly, exclusively & necessarily" in the running of the business and assuming that the expenses took place after the business was registered.

So accountancy fees, startup costs, website registration etc are not reclaimable unless incurred after the VAT registration ? They are 'wholly.....etc' essential but don't qualify if they happen prior to the VAT registration date...?

No, what I said is that you can't claim VAT on any expenses incurred prior to VAT registration. You can however claim the cost of these (including VAT) as long as they were incurred "wholly, exclusively & necessarily" for the business. Any expenses related to the setting up of the business would be allowed.

Once you are VAT registered you can reclaim a refund of VAT paid from that date.

VAT registration / VAT refund is a separate issue to expenses related to the running of the business. Non-VAT registered businesses can claim total cost of purchases (inc VAT) whereas VAT registered claim total cost of purchases (ex VAT) and a refund of VAT paid (in a case where there are no sales).

Got it...just need clarity about valid expense and reclaimable vat cash.....

Once you are VAT registered, you have to return VAT3's periodically (bi-monthly, 4-monthly or bi-annually) depending on what Revenue decide. If you are registered as a Sole trader (VAT registered or not), you are required to file tax returns by 31st Oct (or mid-November if filed online) for the previous year.

When I was starting my business, I purchased some inventory and only then registered for VAT. The VAT man registered me with back date - month or even two (don't remember now). Maybe it is worth to ring them up and ask.

When your business is up & running...do you expect to earn over the VAT threshold? That should be your deciding factor. It's easier not to have to deal with VAT. Although if your business involves purchasing lots from Ireland where you can reclaim, then it might be worth it regardless.