Reply to: Flat Rate Calculator

[TheCyclingProgrammer]

And also personal use element of mobile phones - service plan and call charges??

Check with your accountant. The rules for tax deductibility are different to the rules for VAT reclaims. You can provide one mobile phone for both business and personal use and often provide equipment (e.g. a laptop) where personal use is considered not significant if the sole purpose for the equipment was to enable you to do your job, and claim 100% of the cost against your CT bill but I'm not sure if this extends to reclaiming 100% of the VAT.

My understanding of the VAT rules is that you would have to apportion the claim, which would mean that you could have a company mobile phone used 50/50 for business personal use, offset 100% of the cost against your CT bill but only reclaim 50% of the VAT.

Edit: HMRC have some specific VAT guidance for mobile phone and call costs:

https://www.gov.uk/government/public...ation-expenses

See 12A. TLDR; if a mobile phone provided by the business is used for personal calls, the VAT on the call charges must be apportioned. If you have a clear company policy of not allowing the phone to be used for personal calls, then HMRC will tolerate small amounts of personal use as insignificant for VAT purposes. It also looks like you'd be able to reclaim all the VAT on the purchase of the phone itself and any standing charges.

[SueEllen]

And also personal use element of mobile phones - service plan and call charges??

If the use is incidental then it doesn't count.

[v5srv]

Yes but if a business purchase has a personal/private use element you can only reclaim the proportion that it is used for your business.

Personally I wouldn't worry about minimal personal usage of stuff that you've obviously bought for your business, including office furniture, computer equipment (so long as you really did need it for your work) etc. but be careful with stuff that could have any kind of dual purpose (e.g. a printer that you have in your home office, if its the only printer in the house, is very likely to have some non-business use too).

And also personal use element of mobile phones - service plan and call charges??

[TheCyclingProgrammer]

So you have two printers, one for "Work" and one for the stuff your daughter does for school for instance.

Or you have one, claim there is minimal personal use and claim 100% of the VAT, or if you want to be squeaky clean, reclaim say, 80% of the VAT to allow for any incidental personal use.

[Lost It]

So you have two printers, one for "Work" and one for the stuff your daughter does for school for instance.

[TheCyclingProgrammer]

Doesn't that depend who lives in your house and how much use is personal?

Yes, you only have to restrict your claim to how much private use there actually is, if any.

[SueEllen]

Yes but if a business purchase has a personal/private use element you can only reclaim the proportion that it is used for your business.

Personally I wouldn't worry about minimal personal usage of stuff that you've obviously bought for your business, including office furniture, computer equipment (so long as you really did need it for your work) etc. but be careful with stuff that could have any kind of dual purpose (e.g. a printer that you have in your home office, if its the only printer in the house, is very likely to have some non-business use too).

Doesn't that depend who lives in your house and how much use is personal?

[TheCyclingProgrammer]

How much do you spend on a printer?

If you're suggesting a printer isn't expensive enough to capitalise in your accounts, you're right but it doesn't matter for the purposes of this test.

Capital expenditure - is the cost of any goods which are bought to be used in the business over a period of time (for example, longer than a year). Examples include equipment such as a computer, mobile phone, office furniture, a tablet or a printer, even if they are not necessarily treated as capital assets for accounting purposes. The legislation that describes capital expenditure goods can be found in VAT Regulations 1995, 55A (1).

[TheCyclingProgrammer]

But if change from FRS to the standard scheme those things are legit to claim VAT back?

Yes but if a business purchase has a personal/private use element you can only reclaim the proportion that it is used for your business.

Personally I wouldn't worry about minimal personal usage of stuff that you've obviously bought for your business, including office furniture, computer equipment (so long as you really did need it for your work) etc. but be careful with stuff that could have any kind of dual purpose (e.g. a printer that you have in your home office, if its the only printer in the house, is very likely to have some non-business use too).

[PurpleGorilla]

Yep.

Yep I can claim the vat on a new printer, office chair, scanner, networked HDD and all the other bits and bobs (not capex) if standard scheme?

As well as the VAT on accountant fees etc?

[Eirikur]

..

[SueEllen]

Unfortunately a lot of that is not eligible - see the VAT calculator link
You cannot claim on any capital expenses - that is laptops, printers phones, tablets etc.......

How much do you spend on a printer?

[SueEllen]

But if change from FRS to the standard scheme those things are legit to claim VAT back?

Yep.

[PurpleGorilla]

Flat Rate Calculator

Unfortunately a lot of that is not eligible - see the VAT calculator link
You cannot claim on any capital expenses - that is laptops, printers phones, tablets etc.......

plus see this link - notice the "exclusive" word that is frequently used - so even office supplies don't count if there is home use in the context of flat rate calculations! VAT flat rate

Examples of relevant goods

This isn’t 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

Examples of supplies that aren’t relevant goods

This isn’t an exhaustive list:
•accountancy fees, these are services
•advertising costs, these are services
•an item leased/hired to your business, this counts as services, as ownership will never transfer to your business
•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
•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

As far as I can see, there is no easily found gap to stay on the old flat rate for most of us.

But if change from FRS to the standard scheme those things are legit to claim VAT back?

[d000hg]

You're right that the FRS was never intended to be profitable, but not sure how you came to the conclusion that the new system is "closer to break-even". Far from it - for most service-based businesses it will almost certainly result in a loss compared to the standard scheme or the existing FRS percentages. Which is why most people are moving back on to the standard scheme (which should be VAT neutral).

Surely most service-based businesses aren't on FRS due to the upper limit on turnover, though I may be splitting hairs and you meant "most tiny service-based businesses" to be implied. If by "most people" you mean "most contractors" then we're just one niche who were presumably(?) not the ones FRS were aimed at.

Anyway we have the option to leave FRS so...