Reply to: Large Capital Purchase - One Supplier, Multiple Invoices

[captainham]

Its prolly not worth it but:
One could set up a (non-VAT FRS) company to buy disparate products, and sell them to contractor companies as single transactions.

Most people set up a business to sell whatever it is they offer and make money from doing so. Your business appears to rely on making money from creaming the tax system.

Curious.

[lithium147]

Its prolly not worth it but:
One could set up a (non-VAT FRS) company to buy disparate products, and sell them to contractor companies as single transactions.

[lithium147]

If you are paying 25% on your dividends, then you can also add that on to the effective savings..

[Scrag Meister]

Eh? I'd be interested to see the calculations for that. Say the purchase is £2k net, £2.4k gross:

If you can reclaim VAT, after tax relief you could argue the cost to your business is only £1.6k (£2.4k less £400 VAT reclaimed = £2k, 20% CT relief --> £1.6k).

If you can't reclaim VAT, you simply get CT relief on the whole £2.4k at 20%, arguable net cost to the business is therefore £1,920.

Difference being £320, (ie the £400 VAT less 20% CT). Sounds like a very worthwhile saving to me.

Are my calculations flawed? (it is Friday so give me a break if so...!)

This is my thinking too, and the way I work for capital purchases.

[Maslins]

I think it ws Mal that pointed out that the difference in claiming VAT and not for a £2K purchase was something like £20 difference on the books (it may have been more but not much).

i.e. If you claim VAT then expense is off-set - VAT, if you don't claim VAT the whole amount is off-set so difference is small until you start buying very big toys.

Eh? I'd be interested to see the calculations for that. Say the purchase is £2k net, £2.4k gross:

If you can reclaim VAT, after tax relief you could argue the cost to your business is only £1.6k (£2.4k less £400 VAT reclaimed = £2k, 20% CT relief --> £1.6k).

If you can't reclaim VAT, you simply get CT relief on the whole £2.4k at 20%, arguable net cost to the business is therefore £1,920.

Difference being £320, (ie the £400 VAT less 20% CT). Sounds like a very worthwhile saving to me.

Are my calculations flawed? (it is Friday so give me a break if so...!)

[JamJarST]

I think it ws Mal that pointed out that the difference in claiming VAT and not for a £2K purchase was something like £20 difference on the books (it may have been more but not much).

i.e. If you claim VAT then expense is off-set - VAT, if you don't claim VAT the whole amount is off-set so difference is small until you start buying very big toys.

Yes thats true, but there is a cash flow benefit of claiming the VAT. The saving in CT is only realised over a year later, whereas the VAT saving is within 4 months.

[Notascooby]

I think it ws Mal that pointed out that the difference in claiming VAT and not for a £2K purchase was something like £20 difference on the books (it may have been more but not much).

i.e. If you claim VAT then expense is off-set - VAT, if you don't claim VAT the whole amount is off-set so difference is small until you start buying very big toys.

[Scrag Meister]

I placed an (1) order with Dell, and they split it into 3 orders and 3 invoices, presumably different suppliers for different items.

I contacted them and told them that I needed one invoice for the whole £2k+ order.

They aggregated the invoices into 1 for me. speak to the supplier they may be able to do something similar.

[northernladuk]

I was going to do a similar thing with amazon, but my accountant advised against it..

I feel sorry for your accountant. You see your business as opportunity to fudge your expenses and he is trying to keep you on the straight and narrow.

[lithium147]

I was going to do a similar thing with amazon, but my accountant advised against it..

[rambaugh]

Is this known to be correct? I have put an order in to Apple, but 1 item is on back order for 2 weeks, and 1 for 4 weeks, and I would like them to ship what they can ASAP.

Except I don't think Apple fulfill orders under one invoice in two parts. They will hold delivery until all items in the order are available for them to deliver in one go. If they didn't do it this way they would incur separate delivery charges which I don't believe would be covered in the invoice.

[northernladuk]

Is this known to be correct? I have put an order in to Apple, but 1 item is on back order for 2 weeks, and 1 for 4 weeks, and I would like them to ship what they can ASAP.

But you paid for them in the same transaction though? Bought and delivered are not the same you know.

[dino1300]

WMS

If it is a single purchase i.e. you bought them on the same day as one payment then it is fine to claim the VAT.

Is this known to be correct? I have put an order in to Apple, but 1 item is on back order for 2 weeks, and 1 for 4 weeks, and I would like them to ship what they can ASAP.

[Craig@Clarity]

Good luck...Hope it ends well

[ThomserveBAS]

Phoned HMRC, they knew nothing, phoned accountants (for the fifth time on this subject) and they "chased it up" - informing me that their electronic submission "failed somewhere along the line" and that "they didn't know about it".

Oh well, they are resubmitting it now so the clock starts again.