Treatment of a VAT Paid asset.

[john@UKCA]

HI Clare,

that is a good point.

However, my revenue from contracting is over the VAT limit.

Even if I started a new company for the planb - wouldn't the companies be considered a group for vat reg purposes?

By the way - one thing that has never been clear to me abut VAT. Lets say one of the assets I buy through my company is from Italy - can I claim the vat back? (assuming they sell me the asset as value+vat)

If you are both vat registered there would be no vat charged on the sale.You are just moving goods within the eec- you have to give the seller your uk vat number so that they can zero rate the sale.

[john@UKCA]

HI Clare,

that is a good point.

However, my revenue from contracting is over the VAT limit.

Even if I started a new company for the planb - wouldn't the companies be considered a group for vat reg purposes?

By the way - one thing that has never been clear to me abut VAT. Lets say one of the assets I buy through my company is from Italy - can I claim the vat back? (assuming they sell me the asset as value+vat)

You have to apply for group vat registration. Will not apply anyway if both companies are owned individual shareholders. Group vat only applies when you have a holding company which owns subsidiary companies.

[prozak]

Hi,

no one of the boats I am buying is in Italy.

I am trying to work out the vat implications of importing it for business use into the UK.

[Martin at NixonWilliams]

By the way - one thing that has never been clear to me abut VAT. Lets say one of the assets I buy through my company is from Italy - can I claim the vat back? (assuming they sell me the asset as value+vat)

If your intention is to reclaim Italian VAT (or 'IVA') using the cross border EU refund system, this is not an option if you provide goods or services in Italy.

[Clare@InTouch]

HI Clare,

that is a good point.

However, my revenue from contracting is over the VAT limit.

Even if I started a new company for the planb - wouldn't the companies be considered a group for vat reg purposes?

By the way - one thing that has never been clear to me abut VAT. Lets say one of the assets I buy through my company is from Italy - can I claim the vat back? (assuming they sell me the asset as value+vat)

You cannot reclaim foreign VAT unless you're VAT registered in that country, which opens up a whole new can of beans.

The rules regarding VAT groups can be quite complex, especially if the two businesses are entirely different. Control plays a major role too. It's an area that would involve a wee bit more research to be honest.

[prozak]

The capital allowances would be based on the whole £120k, you can ignore any VAT implications there as none was charged.

In theory, if you buy an asset without VAT it should be 20% cheaper than an asset with VAT would be. In theory! The same as if you buy a sofa from a small company it should be cheaper than one from DFS as there's no VAT. In my years in general practice I had a few clients who would always limit their turnover purposely to stay under the VAT limit as it made them 20% cheaper than the big boys - a plumber who suddenly had to increases prices by 20% can find himself with few clients.

HI Clare,

that is a good point.

However, my revenue from contracting is over the VAT limit.

Even if I started a new company for the planb - wouldn't the companies be considered a group for vat reg purposes?

By the way - one thing that has never been clear to me abut VAT. Lets say one of the assets I buy through my company is from Italy - can I claim the vat back? (assuming they sell me the asset as value+vat)

[Clare@InTouch]

Thanks Clare.

Non vatable gotcha.

Capital allowances OK. So if I pay 120k for it I only have the 100k to use?

Selling.... ugh. that's a pain. so if i have an asset that I paid 100k for and try to sell it immediately i would have to charge 120k (inc vat) to recoup the 100k?


I think my initial idea of keeping VAT paid assets as personal assets and having a management agreement with the company is the way to go. Or only buy vat claimable assets!

The assets are boats by the way.

The capital allowances would be based on the whole £120k, you can ignore any VAT implications there as none was charged.

In theory, if you buy an asset without VAT it should be 20% cheaper than an asset with VAT would be. In theory! The same as if you buy a sofa from a small company it should be cheaper than one from DFS as there's no VAT. In my years in general practice I had a few clients who would always limit their turnover purposely to stay under the VAT limit as it made them 20% cheaper than the big boys - a plumber who suddenly had to increases prices by 20% can find himself with few clients.

[prozak]

You won't be charged VAT by the seller, so it's non-VATable.

Capital allowances and depreciation work as normal, based on the total value of the asset ignoring VAT entirely.

If you sell it, you are VAT registered so you have to charge VAT. Assuming it's a VAT-able item.

Thanks Clare.

Non vatable gotcha.

Capital allowances OK. So if I pay 120k for it I only have the 100k to use?

Selling.... ugh. that's a pain. so if i have an asset that I paid 100k for and try to sell it immediately i would have to charge 120k (inc vat) to recoup the 100k?


I think my initial idea of keeping VAT paid assets as personal assets and having a management agreement with the company is the way to go. Or only buy vat claimable assets!

The assets are boats by the way.

[Clare@InTouch]

You won't be charged VAT by the seller, so it's non-VATable.

Capital allowances and depreciation work as normal, based on the total value of the asset ignoring VAT entirely.

If you sell it, you are VAT registered so you have to charge VAT. Assuming it's a VAT-able item.

[prozak]

Hi all,

been a while.

Plan B is in full flow and is now over 20% of the companies revenue.

looking to buy a few assets within the business now (i own one personally at present)

Some of these assets come as VAT Paid - as they are owned by persons and not businesses.

My understanding is that the opportunity to claim the VAT has gone.

But what code is it dealt with?
What happens if I sell the asset?
What happens in terms of the capital allowances and depreciation?

Thanks