The query relates to VAT for a friend. He has been trading over a year and his existing Accountant / bookkeeper has registered him for the flat rate VAT scheme, first return due End February this year.
I have had a look at the following which I have sent across to him, which to my mind reads as it allows him to claim VAT back on stock already purchased and services.
His existing accountant is adamant that he cannot claim for stock he still has or any services. Existing stock inc VAT is likely to be in the region of 50K cost so around £8400 VAT to claim, plus any services etc.
Do you know if he can or can't claim these items as the way I read it, he can?
Have a look at the .gov website concerning Flat Rate VAT Special Notice 733 Section 7.6: https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses which then links you to:
section5.2 VAT you paid before you registered says:
"Subject to certain conditions, you can claim back any VAT you’re charged on goods or services which you use to set up your business. These conditions are listed in section 11 of the VAT guide (VAT Notice 700).
Normally, this will include:
- VAT on goods supplied to you for use in your business up to 4 years before your registration date and which you have not used up or sold
- VAT on services supplied to you not more than 6 months before your registration date
We may allow you to backdate your registration voluntarily by up to 4 years when you apply to register. You should think carefully about whether this would be a good idea for you because, once we agree a registration date with you, we will not normally allow you to change that date.
You should include your claim for this VAT on your first VAT return. VAT guide (VAT Notice 700) tells you how to do this."