Paying UK VAT on goods pre VAT registration

mikeyclare

Registered User
Messages
12
Hi

I have a business that will need to VAT register as my turnover is probably going to exceed the limits. My business is only operating 2/3 months but going on the monthly limit I will go over the limits. When do I need to VAT register? Will doing it at 6 months be ok? I would estimate my annual turnover to be £100k for sale of goods.

I also purchase all my stock in the UK and pay UK VAT at date of purchase.

If I VAT register in Ireland next month is there any way I can reclaim the UK VAT paid on stock held at date of VAT registration as surely it seems unfair if I also have to pay VAT again on the sales price?! I understand going forward I will not pay UK VAT on stock purchased but I still have the problem that I have paid more for some stock that I will need to declare as sales on my vat return.

Help. Thanks
 
Hi,

You should register for VAT WHEN you expect your annual turnover will exceed the relevant limit not when your turnover exceeds the limit. This may now be 1 January 2012. Did your business plan have a projected turnover in it which exceeded the threshold.
 
Last edited:
Thank you for your replies guys. I did have a business plan but did not expect my turnover to exceed the limits in the first year.

I am still struggling to see how I reclaim the UK VAT incurred pre-registration on stoskc held? The advice below only seems to relate to Irish VAT incurred as far as I can see?
Pre-Registration VAT Reclaims

While there is generally no provision for backdating VAT registration, you may claim a credit for the VAT content of stock for resale held at the beginning of the two-monthly taxable period for which you first registered. That is, if you register for VAT on the 10th of February, you may reclaim credit for stock held on or purchased from the 1st day of the preceeding month, January-February being a single tax period. However you are not entitled to a vat credit for capital goods i.e. plant & machinery, buildings, vehicles, fixtures, fittings etc., held at the time of registration
 
Perhaps you could consider returning the stock to the supplier and getting credit notes for it. Then purchase the stock having provided your VAT number to the supplier and they will zero rate the supply thereby. There is a method for reclaiming UK VAT but you will be trying to recover VAT from a period that you were not registered.

Have you asked your accountant about this. It may be better to back date your registration to day 1 and recover any VAT paid on capital expenditure.
 
It may be better to back date your registration to day 1 and recover any VAT paid on capital expenditure.

My understanding is that this cannot be done? Have you been able to recover VAT on pre-registration capital expenditure?
 
It may be better to back date your registration to day 1 and recover any VAT paid on capital expenditure.

My understanding is that this cannot be done? Have you been able to recover VAT on pre-registration capital expenditure?

You're partly correct. You can't back date an election to register. A registration usually takes effect from the next VAT period. But, you agree an earlier date with the inspector of taxes.

OP has been trading 2/3 months. It may be possible to back-date the registration to 1 November 2011. If the registration was back-dated you could ask the supplier to issue a credit note and re-issue the invoices without VAT (without any return of stock). But this would need agreement with Revenue and VAT would be payable on any previous sales, so it may not be worth it.

Sending back the goods is hardly practical and the shipping costs are going to reduce any VAT saved.

I think you need to look at the UK's VAT rules. My understanding is the UK has the same provision we have for opening stock, ie you can reclaim the VAT on opening stock value at the date of registration. The EU reclaim process, referred to by other posters, allows the VAT incurred on goods purchased in the period to be reclaimed. It's possinble that opening stock could be "deemed" purchased in the period, but you would need to check with the HMRC if this is acceptable.
 
Thank you very much for your replies everyone, I will look into the UK VAT rules as suggested.
 
Back
Top