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Due To The Investment In The Business We Are Starting In July, Should We Resiter For Vat. So We Can Get The Vat Back?
If we do, can we de-register the following year as we dont really want to be VAT registered?
We are guessing that we would be able to stay under the VAT threshold.
We are guessing that we would be able to stay under the VAT threshold.
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I would always advise anyone, however small the business, to use an accountant. There are so many things to consider with tax and VAT. You'll never be able to cover them yourself without a lot of research. I've always found that an accountant will save you far more than their fees.
When you register for VAT, you can indicate that your intention is to make enough taxable supplies to see registration.
In your set-up costs, some, but not all expenses will be re-claimable. This is where an accountant comes in.
After a year or so, if you look as though you're going to be below the threshold, then it's a simple procedure to de-register. Remember though, HMRC do not have to accept your reasons for de-registering, especially if they sniff that you're doing this merely to recoup your set-up VAT.
It's always a matter of intent, and following the "spirit" of the Laws with HMRC. It's not just a matter of following the rules, rather, how you interpret them.
When you register for VAT, you can indicate that your intention is to make enough taxable supplies to see registration.
In your set-up costs, some, but not all expenses will be re-claimable. This is where an accountant comes in.
After a year or so, if you look as though you're going to be below the threshold, then it's a simple procedure to de-register. Remember though, HMRC do not have to accept your reasons for de-registering, especially if they sniff that you're doing this merely to recoup your set-up VAT.
It's always a matter of intent, and following the "spirit" of the Laws with HMRC. It's not just a matter of following the rules, rather, how you interpret them.
Bit of a broad brush answer with certain assumptions, but until you engage your accountant, here goes.
In the first year(s), I`m assuming you will have capital expenditure on which you will pay VAT. You may well make a loss in that first year which you can then offset against profits in later years. Having been subject to VAT, early losses will be greater (as the VAT will add to the cost line). However since you will offset that loss anyway, I cannot see that it is going to make any difference whether you are registered or not in that first year of large capital cost.
My experience of HMRC on VAT is that there is no problem registering even if your turnover is under the threshold. You have to register once it goes over threshold. There is then no issue deregistering if you declare turnover under.
Not one of my clearest explanations, but if you work out using a simple example you will hopefully get the gist.
In the first year(s), I`m assuming you will have capital expenditure on which you will pay VAT. You may well make a loss in that first year which you can then offset against profits in later years. Having been subject to VAT, early losses will be greater (as the VAT will add to the cost line). However since you will offset that loss anyway, I cannot see that it is going to make any difference whether you are registered or not in that first year of large capital cost.
My experience of HMRC on VAT is that there is no problem registering even if your turnover is under the threshold. You have to register once it goes over threshold. There is then no issue deregistering if you declare turnover under.
Not one of my clearest explanations, but if you work out using a simple example you will hopefully get the gist.
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