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Where Taxpayers and Advisers Meet

New Startup as a Smallholder VAT

grantmcscott
Posts:4
Joined:Mon Apr 23, 2018 9:42 am
New Startup as a Smallholder VAT

Postby grantmcscott » Thu Apr 04, 2019 9:50 am

Hi
My partner with my help will be starting out as a smallholder on the 5th April and registering for self assessment. I do not envisage her either making any money in the first 2 years and turning over £85K.

During the first few years there will be considerable investments made for example new equipment 7K, new shed 20K and animal feed / bedding.

Can she register for VAT and claim it back in the first few years from starting up?

Thanks for any advise
Grant

Trevor S
Posts:108
Joined:Tue Jan 01, 2019 12:37 am

Re: New Startup as a Smallholder VAT

Postby Trevor S » Sun Apr 07, 2019 3:01 pm

You can reclaim VAT on pre-registration costs of the business - up to 6 months for services, or 4 years for goods that you still own.

Alternatively, you may want to consider voluntary registration. The £85k turnover threshold is where registration is compulsory, you can register voluntarily before then. Remember though that VAT can only be recovered on your taxable business activities, plus you would have to start charging VAT on your income earlier than if you waited until you were required to register. May be worthwhile if your customers are businesses who can recover VAT, as you could add the VAT to your existing charges without it being a cost to them. But if your customers cannot reclaim VAT, you may find yourself needing to absorb the cost in order to remain competitive, and that cost may exceed the benefit of the VAT recovery on expenditure.


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