Flat rate scheme

[abc-inflatables]

Hi Im going to join the flat rate scheme
Is it correct that i can reclaim the VAT on stock and assets I have on hand at the time I register.

[Generix]

From notice 733: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000345&propertyType=document#P370_34573

7.6 Can I recover VAT on stock and assets I have on hand at registration?
Yes. Record the claim for eligible VAT in your VAT account for your first VAT return.

For details of the rules for claims, see Notice 700/1 Should I be registered for VAT?

If you do claim VAT on capital assets on hand at registration and dispose of them later, you must account for VAT at the standard rate of VAT under the normal VAT rules.

Also if I remember correctly you have an associated business, therefore you should read the section on 'associated businesses' to ensure you don't fall into that category.

[abc-inflatables]

Hi Thankyou

I dont realy understand why you can claim vat on the stock on hand on the first return but after that you cant claim anything for stock?

[Generix]

Hi Thankyou

I dont realy understand why you can claim vat on the stock on hand on the first return but after that you cant claim anything for stock?

Its not so much meant for goods traders, its more for stuff that you are unlikely to sell...e.g. start up costs of machinery/stationary etc.

Any goods you claim the VAT back on you have to sell and pay HMRC the full 20% VAT on, i.e. they are excluded from the flat rate scheme.

[abc-inflatables]

Thankyou

That would make more sense