Self Employed - What Benefit can I accrue from my VAT#

[fmmc]

Hi, I've recently ceased life as a PAYE worker and went solo as a Management Consultant. I'm registered for VAT due to expected earnings. I'm in the dark though as to how I can maximise the benefit of being VAT registered. For example, my architect recently furnished me with a bill for house plans/processing application etc. and the VAT on his bill leaves a biter taste to say the least. He has advised though that given I had a VAT #, I could reclaim the VAT element of his bill? Any advise on this particular example and/or other possibilities appreciated. Confused novice.

 

[dam099]

Hi, I've recently ceased life as a PAYE worker and went solo as a Management Consultant. I'm registered for VAT due to expected earnings. I'm in the dark though as to how I can maximise the benefit of being VAT registered. For example, my architect recently furnished me with a bill for house plans/processing application etc. and the VAT on his bill leaves a biter taste to say the least. He has advised though that given I had a VAT #, I could reclaim the VAT element of his bill? Any advise on this particular example and/or other possibilities appreciated. Confused novice.

Were the house plans/application related somehow to your business (e.g. extension/conversion for a home office) or were they personal in nature? You can only reclaim VAT on expenses related to your business not building your new house.

 

[liteweight]

Damo99 is correct, you can only reclaim VAT on business expenses. Rev. expect you to make VAT returns every two months.

Basically, when you send out an invoice it will include your bill plus VAT.

Lets say 100 + vat @ 21% = 121.

Say you have business expenses of 200 + VAT =242.

VAT billed =21 less VAT paid 42.

Result is rebate of 21.

 

[z107]

Unfortunately, as a management consultant you'll probably won't incur too many business expenses compared to VAT on sales. In effect, you'll be an unpaid tax collector for the revenue.

 

[liteweight]

Unfortunately, as a management consultant you'll probably won't incur too many business expenses compared to VAT on sales. In effect, you'll be an unpaid tax collector for the revenue.

Depressing!!! You don't have to be VAT registered if your sales/earnings are below a certain amount. Think it's 20k approx. Jeez...that's even more depressing!! You can claim for things like stationery, office equipment, computer etc. Good luck in the new venture.