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VATable expense items not appearing on VAT return
Should FAC be claiming some expense types on the VAT return? - I'm sure I've bought stuff that is claimable, but nothing has ever appeared as Input VAT.
If I buy a capital asset, or a 'cost of sales' item with my personal credit card, and then claim it, then should this not appear?
If I buy a capital asset, or a 'cost of sales' item with my personal credit card, and then claim it, then should this not appear?
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Inappropriate?Charles,
Yes, as long as you're not using the Flat Rate Scheme those expenses should indeed be included as Input VAT.
If you are on the FRS, you can only reclaim input tax on big (>£2000 inc VAT) capital purchases.
Does that answer your question, or is there a bug we need to look into?
1 person says
this answers the question
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Inappropriate?Thanks for this, I hadn't realised the lower limit for the FRS.
However, what about reclaiming on services, like telephone line rental, web server costs etc. As I understand it, they're not 'capital assets'?
I've put various expenses onto FAC, including those just mentioned, and am now preparing my first VAT return (and am on the FRS). However, my box 4 on the return in FAC is showing £0.00.
http://www.hmrc.gov.uk/manuals/bimman...
I’m confused
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Inappropriate?It's not easy to get your head round the Flat Rate Scheme!
1. You charge your customers 17.5% VAT as normal.
2. Your output VAT for the VAT return is the relevant % of your sales for that period Including VAT. For example £10,000 + VAT of £1,750 was invoiced. FRS % say 10% gives output VAT of £1.175 to be entered on VAT return.
3. The ONLY input tax you can reclaim is VAT on "capital assets" costing more than £2000 inclusive of VAT.
Hope that helps. -
Inappropriate?Thanks Stuart.
David, what Stuart described is exactly what FreeAgent uses to calculate the FRS VAT.
Hope between us we've managed to make it a bit clearer. -
Inappropriate?OK, thanks guys. So, looks like the FRS isn't quite the gift-horse I thought it was (I was naively ignoring the 'flat rate' part of it), but I think it still works out better for me (my FRS rate is 13% because my business is in IT/Consultancy) as I don't have a huge amount of VAT that I'd otherwise claim back.
Is it true that the £2,000+ (inc. VAT) allowance can be backdated? I've possibly spent that much on my PC over the years, which I now use primarily for my business, and have the receipts/invoices. I realise this isn't a FAC question!
I’m grateful
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Inappropriate?One of the advertised benefits is supposed to be the reduced paperwork (not needing to track individual transactions and do all the work for the VAT Return). Of course since FAC does all this for you - that stops being such a factor. ;-)
I've started acting as a reseller for some bits of software, and the Flat Rate Scheme means I cannot claim back the VAT for any licences I purchase for later resale to clients (Re-salable stock is not a capital expense). At present, I'm keeping an eye on what this is costing me, as at some point it'll probably make more sense to opt out - depending on how much direct product reselling I end up doing. -
Inappropriate?You can reclaim VAT on items bought before registration (subject to HMRC's rules). Strangely the £2000+ limit does NOT apply on those items. Also you reclaim the 17.5% input VAT but when you sell the assets you charge the 17.5% but only pay the flat rate %. Daft but good news!
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