My daughter’s incorporated beauty salon business has had to register for VAT from 1 October 2018.
I understand that it can reclaim input VAT on goods bought within the previous 4 years for the business to the extent they have not been consumed by 1 October.
The salon does hold some stock for sale to retail customers.
But the majority of stock at 1 October is small bottles of nail varnish - hundreds of them. These are used bit by bit over a period of years when a customer selects a particular colour.
Regulation 111 says that the Commissioners may require a "stock account showing separately quantities purchased, quantities used in the making of other goods, date of purchase and date and manner of subsequent disposals of both such quantities."
I am concerned that whilst her business can properly record the date and manner of stock retail sales, is it really expected to record details of small utilisation of nail varnishes each time a customer uses a colour? Or in respect of nail varnish utilisation will it be sufficient to record the date that a bottle in stock at 1 October 2018 gets empty or is thrown away when the contents get too gloopy?
Also each opened bottle was treated as 50% full for calculating stock at 1 October. As the bottles are thrown away when slightly less that half full (when they go gloopy) this under-estimates stock levels. Will this treatment be acceptable to the VATman?
Thanks for any help anyone can give me.