Register for VAT & claim back VAT paid

[Catering141]

I have a small business on the side to my main office job, a beauty salon. I'm not reg for VAT obviously, but I started training and buying stock 4 years ago and was adding all my receipts to my accounts here and I have spent 10K in courses and stock, so over 2K in VAT paid by me. Am I correct in thinking if I register for VAT I can claim back that 2K I paid? And how far back can I claim VAT, is it 4 years like med 1 forms?


Thanks.

 

[Setanta12]

I recall you can register for VAT but I think maybe for three years only.

Talk to a AITI qualified tax advisor - not a general high-street accountant.

Your first VAT return will be very probably subjected to a desk audit where your return and invoices etc will be asked for. Reason for the audit ? Claim a refund in first return !

 

[hastalavista]

I have a small business on the side to my main office job, a beauty salon. I'm not reg for VAT obviously, but I started training and buying stock 4 years ago and was adding all my receipts to my accounts here and I have spent 10K in courses and stock, so over 2K in VAT paid by me. Am I correct in thinking if I register for VAT I can claim back that 2K I paid? And how far back can I claim VAT, is it 4 years like med 1 forms?


Thanks.

No chance.
The most u can do is go back to the start of the 2 month period during which u first register for VAT.
In addition the reclaim is only for stock for resale, not the training courses.

Pre-Registration VAT Reclaims

While there is generally no provision for backdating VAT registration, you may claim a credit for the VAT content of stock for resale held at the beginning of the two-monthly taxable period for which you first registered. That is, if you register for VAT on the 10th of February, you may reclaim credit for stock held on or purchased from the 1st day of the preceeding month, January-February being a single tax period. However you are not entitled to a vat credit for capital goods i.e. plant & machinery, buildings, vehicles, fixtures, fittings etc., held at the time of registration.

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[vandriver]

Don't forget you would be liable for VAT on all your sales,which in a beauty salon ,it would be difficult to pass on to the customer.

 

[Catering141]

Thanks for your repsonses, it wasn't just courses, majority was stock for treatments. I Thought it seemed too easy in my head to be true I knew someone here would know.

But just another question, the VAT I pay on stock is 21% and the VAT I would then be charging to customers would be only 13.5% as it's a service, so would it not make sense to registar as I'd be able to get back the 7.5% difference? I won't be taking in near the threshold as I work from home at the moment, but I still do spend a lot on stock as it's actually quite expensive to get the products in.

 

[T McGibney]

But just another question, the VAT I pay on stock is 21% and the VAT I would then be charging to customers would be only 13.5% as it's a service, so would it not make sense to registar as I'd be able to get back the 7.5% difference?

You will need to do the sums on this yourself. However it is unlikely that you will gain, as VAT @ 13.5% must be charged on the 'service' element of your invoice in addition to the 'products' element.

If the cost of products exceeds two-thirds of the total cost of your 'products + service' invoices, VAT @ 21% must be charged on the entire invoice.

Remember, VAT is a tax collection system for the State, it is highly unlikely that any business selling to consumers will gain from voluntary VAT registration.

 

[Catering141]

Gosh that's very complicated to work out portion of product used on treatment (easy for some things like the creams or the varnishes etc. as can easily see how many treatments I get out of one bottle, but all the add ons like the disposable items - spatulas, cotton wool and lots others). Better get an accountant I think and let them look after all this stuff. Cheers.