Limited Cost Trader Flat Rate Scheme

[Onetime]

I am a vet, working as a locum. I have a limited company and have been using the FRS for a few years. I have fallen into the limited cost trader category. My turnover is circa £35k before VAT.

I have just applied to change to the annual VAT accounting scheme. My current plan is to just buy £1000 worth of books or equipment each year that I will use as part of the business and hence no longer fall into the limited cost trader category.

Is there a better alternative to this? Perhaps buying £1000 worth something veterinary related eg soft cat cages or collars from China that I could then sell for a small profit on ebay or Amazon? Or would that not work?

Many thanks,

James

[Onetime]

The books are something I need to buy anyway, £1000 only buys a handful of veterinary books. I was thinking of buying and selling things on ebay anyway as a further income stream. I have a large empty garage and there's a Post Office a couple of hundred yards away. It would seem to make sense to buy an sell things within my area of expertise.

So looking at the guidance, the following are excluded:

goods for resale, leasing, letting or hiring out if your main business activity doesn’t ordinarily consist of selling, leasing, letting or hiring out such goods
goods that you intend to re-sell or hire out, unless selling or hiring is your main business activity

The main business activity being Veterinary Medicine, vet practices will typically have a small display of animal related products for sale - collars, leads, cat baskets etc.
Would sale of these be excluded as relevant goods as I have not sold them previously?

Many thanks for your help.

James

[robbob]

I would recommend reading the full chapter and verse of 4.6 in notice 733

It does say

4.6 Relevant goods

Relevant goods are goods that are used exclusively for the purposes of your business, but don’t include:
goods for resale, leasing, letting or hiring out if your main business activity doesn’t ordinarily consist of selling, leasing, letting or hiring out such goods
goods that you intend to re-sell or hire out, unless selling or hiring is your main business activity


Examples of supplies that aren’t relevant goods
This isn’t an exhaustive list:

goods which are bought solely to meet the test, as these would not be used exclusively for the purposes of your business. For example, if the quantity of goods being bought can’t reasonably be used by the business and are simply ‘stockpiled’ or thrown away, even if the business may normally use those items is smaller quantities such as office materials

[Onetime]

Thanks for the reply.

I have read the all relevant parts of VAT Notice 733, and chatted this over with my accountant but am still at a loss.

No goods would be purchased purely to satisfy the test, books will be bought to be read to keep up to date with current thinking, and items potentially bought to sell for a profit as part of the business.

Thanks, James

[les35]

If you did not previously buy and sell those goods you describe, then you may have a problem convincing HMRC that that is part of your normal business activity. You described yourself as a locum vet, not a seller of animal-related products. You should note you do note have to convince other TaxationWeb correspondents, but a potentially awkward HMRC Officer!