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Is VAT punitive for threshold contractors?

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    #31
    Originally posted by MrButton View Post
    Why does it have to be over £2k?
    This is the rule as per HMRC, the rhyme or reason for £2K I am sure they have a good answer for that!

    Taken from the link as per the above post:

    15.2 Reclaim of VAT on capital expenditure goods

    If you use the Flat Rate Scheme, you can reclaim the VAT you have been charged on a single purchase of capital expenditure goods where the amount of the purchase, including VAT, is £2,000 or more.

    You deal with these capital expenditure goods outside the Flat Rate Scheme. This means that you claim the input tax in box 4 of your VAT return.

    If the supply is:
    •more than one purchase
    •under £2,000 including VAT, or
    •of services

    then no VAT is claimable, as this input tax is already taken into account in the calculation of your flat rate percentage.

    15.3 What counts as a single purchase of capital goods?

    The normal VAT rules are used to determine whether any particular supply is one, or more than one, purchase and whether supplies are of goods or services.

    Examples of a single purchase are:
    •a computer package (computer, printer, camera, scanner, speakers etc.) bought as one package is one purchase of capital expenditure goods. If the package costs £2,000 or more (incl. VAT) then input tax can be claimed
    •items of kitchen equipment (a pizza oven, a fridge and a dishwasher) bought for a restaurant. If all the items are from one supplier at one time, then they count as one purchase of capital expenditure goods. If they are from three different suppliers or at three different times then they will be three purchases and each must be £2,000 or more (inc VAT) to qualify for a reclaim of VAT

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      #32
      Originally posted by northernladuk View Post
      Are you asking where is the rule that says 2K or just discussing why the limit has been set to 2k?

      https://www.gov.uk/vat-flat-rate-scheme
      Im asking why the 2k was mentioned at all. I didn't see anything specifically to do with FRS in this thread. And FRS wasn't mentioned in his post.

      "you may be able to claim back the VAT on certain asset purchases with a VAT-inclusive price of £2,000 or more."

      This a line which could cause more confusion than clarity without specifically saying you're on about FRS.
      Last edited by MrButton; 9 August 2018, 15:06.

      Comment


        #33
        Originally posted by MrButton View Post
        Im asking why the 2k was mentioned at all. I didn't see anything specifically to do with FRS in this thread. And FRS wasn't mentioned in his post.

        "you may be able to claim back the VAT on certain asset purchases with a VAT-inclusive price of £2,000 or more."

        This a line which could cause more confusion than clarity without specifically saying you're on about FRS.
        Ah got you now and very true.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

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