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Don't forget to reclaim the VAT

By Cheaper Accountant, Sep 20 2015 04:05AM

A number of businesses find themselves needing to register for VAT after trading for some time. This is likely to be due to sales exceeding the VAT registration threshold.


If your business does fall into this category then you shouldn’t forget to consider the option of reclaiming VAT paid on goods and services purchased prior to your VAT registration date.


You will have the option of reclaiming the VAT paid on goods purchased no more than four years prior to the registration date, providing the following criteria is met:


1. The goods were bought by the entity which has registered for VAT

2. The goods relate to your VAT taxable supplies, this could be goods or services

3. The goods are still held


You cannot reclaim the VAT associated with the following:


1. Goods consumed prior to registration

2. Goods sold or supplied prior to registration

3. Goods relating to supplies that are exempt from VAT


Goods = held for resale as well as equipment, fixtures and fittings.


The VAT paid in relation to services bought during the six months prior to registration can be reclaimed providing:


1. The services were bought by the entity just registered for VAT

2. The services relate to VAT taxable supplies


You cannot reclaim the VAT associated with the following:


1. Services relating to goods sold prior to registration

2. Services relating to supplies that are exempt from VAT

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