Limited Trade Test Relevant Goods

[Orangecat]

Merry Christmas! It would be great if anyone can help..

1. Would travel luggage count? what about computer docking station and USB etc?
2. What would count for relevant goods? smaller appliances, lamps, charger, earphone etc would these count?

Thanks a lot for your help

The cat

[ladymuck]

Relevant goods are those used exclusively for the purpose of your business.

See section 4.6 of VAT Notice 733
VAT Notice 733: Flat Rate Scheme for small businesses - GOV.UK

Examples of relevant goods

This is not an exhaustive list:

• stationery and other office supplies to be used exclusively for the business
• gas and electricity used exclusively for your business
• fuel for a taxi owned by a taxi firm
• stock for a shop
• cleaning products to be used exclusively for the business
• hair products to use to provide hairdressing services
• standard software, provided on a disk
• food to be used in meals for customers
• goods provided by a subcontractor and itemised separately
• goods brought into the UK if they are not otherwise excluded
• goods bought without VAT being charged, if they are not otherwise excluded

Examples of supplies that are not relevant goods

This is not an exhaustive list:

• accountancy fees, these are services
• advertising costs, these are services
• an item leased or hired to your business, this counts as services, as ownership will never transfer to your business
• goods not used exclusively for the purposes of your business, for example electricity to supply a home and an office located in the home
• food and drink for you or your staff, these are excluded goods
• fuel for a car this is excluded unless operating in the transport sector using your own, or a leased vehicle
• electronic devices, such as a laptop or mobile phone for use by the business, this is excluded as it is capital expenditure, see paragraph 15.1
• anything provided electronically, for example, a downloaded magazine, these are services
• rent, this is a service
• software you download, this is a service
• software designed specifically for you (bespoke software), this is a service even if it is not supplied electronically
• goods which are bought solely to meet the test, as these would not be used exclusively for the purposes of your business, for example, if the quantity of goods being bought cannot reasonably be used by the business and are simply ‘stockpiled’ or thrown away, even if the business may normally use those items is smaller quantities such as office materials
• stamps and other postage costs, these are payments for services

[Orangecat]

Relevant goods are those used exclusively for the purpose of your business.

See section 4.6 of VAT Notice 733
VAT Notice 733: Flat Rate Scheme for small businesses - GOV.UK

Thanks it is more that I don't fully understand what included in stationery and other office supplies to be used exclusively for the business. It would be much appreciated if someone can give a few examples.

Thanks a lot

[Orangecat]

Thanks it is more that I don't fully understand what included in stationery and other office supplies to be used exclusively for the business. It would be much appreciated if someone can give a few examples.

Thanks a lot

Separately, another question: For the first VAT period, the pre-trading & pre incorporation cost, would that be counted for the first period VAT 2% test?

Thanks

[ladymuck]

Thanks it is more that I don't fully understand what included in stationery and other office supplies to be used exclusively for the business. It would be much appreciated if someone can give a few examples.

Thanks a lot

Stationery = pens, paper, envelopes, paperclips, batteries, etc.

If you've worked in an office before, have a think about what sort of things were supplied.

These would generally be consumables that are replenished on a periodic basis.

If you need a headset/microphone for work, that could count too.

There is no definitive list as every business has slightly different requirements. The key point is that the purchase is entirely for business use.

[northernladuk]

If you are having to ask then I bet you know what the answer is.

Top sockie trolling though. Can mods do the needful.

[BlasterBates]

You can justify a desk or chair and probably a lamp too for the desk.

Can my company pay for home office fittings?

Your office is a room in your residential property, previously used for personal use, then you are obliged to pay for these ‘decorative peripherals’ - and I would count blinds and curtains in this respect, as part and parcel of you running your own home. Similarly, light fittings are part of the basic structure of the room and are therefore deemed to be an improvement to the property and so would not receive tax relief.

Conversely, your desk and chair is wholly, exclusively and necessarily for you to perform your business activities – if you require an additional desk which is necessary for your role, then this of course, attracts tax relief via capital allowances as office equipment.

I doubt HMRC would quibble over a suitcase though you could argue that it could be used for leisure.

You can claim additional costs such as individual business calls, and additional charges for heating and lighting.

you will entitled to claim the extra costs of heating and lighting the work place as well as business calls/broadband costs on a just and reasonable basis.

[TheCyclingProgrammer]

If what you’re really trying to ask is: can a service based contractor business avoid the limited cost trader rules, then the answer is almost certainly no.

Most of our costs are services (eg accountancy) or capital assets (equipment, office furniture) and any expenditure on goods are likely to be small sundry items that are likely to be a tiny proportion of your revenue.

For this reason there’s very little benefit to being on the flat rate scheme these days.

[Orangecat]

If what you’re really trying to ask is: can a service based contractor business avoid the limited cost trader rules, then the answer is almost certainly no.

Most of our costs are services (eg accountancy) or capital assets (equipment, office furniture) and any expenditure on goods are likely to be small sundry items that are likely to be a tiny proportion of your revenue.

For this reason there’s very little benefit to being on the flat rate scheme these days.

Oh.. does it mean if the cost is over 2% but I am a service company that would attract look into why I am not a limited company? Just planing to get some quality stationary, which might cost 3% of revenue.. thanks.. I guess good stationary is still stationary not asset...

[Orangecat]

You can justify a desk or chair and probably a lamp too for the desk.

Can my company pay for home office fittings?





I doubt HMRC would quibble over a suitcase though you could argue that it could be used for leisure.

You can claim additional costs such as individual business calls, and additional charges for heating and lighting.

Thanks that’s clear!