Recovery of VAT incurred between deregistration and re-registration.
VAT Question
My clients turnover dropped below the deregistration limit about 3 years ago and so he deregistered and had to account for output tax on his stocks and assets at the time of deregistration. His turnover has now increased and he has had to re-register, obviously with a new VAT number.
Can he claim VAT back on the purchases he made during the 3 years that he was not registered, even though he was registered for VAT before?
VAT Answer
The simple answer to the question is ‘Yes’. The normal rules regarding recovery of VAT incurred prior to VAT registration apply to the new VAT registration, not the business that is registered, and therefore apply as equally to a business that has to re-registered for VAT as they do to new business registering for VAT for the first time.
However, VAT recovery on goods will only be allowed for goods actually purchased during the 3 years your client was not registered and not on those stocks and assets on which he had to declare VAT at the previous deregistration.
This is because, at the time your client deregistered, the stocks and assets are deemed to be sold by him as an existing VAT registered business to himself as a business that is not VAT registered.
Therefore, if your client ‘brings back’ those stocks and assets into his newly VAT registered business, they are deemed to be a sale from your client as a business that is not VAT registered and therefore, as no VAT would be chargeable on this deemed sale, there is no VAT to reclaim.
Related VAT Questions
Evidence of Zero-Rate Building Services Regarding New Dwelling
My client is a DIY housebuilder and has engaged the services of a building contractor to build the house for them. The contractor is insisting that, in order for him to zero-rate his supplies to my
VAT on Baby Clothes
My client, who sells baby gifts and accessories, has just registered for VAT. Are these zero-rated supplies like children’s clothing? Items sold include baby sized towels, muslin cloths, blankets
Payroll for UK employees going to work overseas and offshore remote workers
We are frequently asked to advise on the Income Tax and National Insurance treatment of UK employees who are being sent to work overseas, and employees who will work remotely from an offshore locat
Supply and Installation of Window Blinds
My client supplies blinds for windows and back in 2021, supplied and installed some blinds to houses at a new housing development before the houses were complete.
What if the Supplier has Charged UK VAT
Do I need to reverse charge VAT for any supply of services ((i.e., software from Apple, Microsoft, Adobe etc…) with no valid vat receipt (no GB vat number). Is any supply of services (i.e.
Are ‘as new’ goods classed as “second-hand goods” for the Second-Hand Margin Scheme?
My client buys high end, high value footwear, mainly trainers, from private sellers so does not incur VAT when he buys the footwear. However, he will only buy the footwear if they are still boxed a
Real people, real results
Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.
Don’t be shy,
get in touch
Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.
"*" indicates required fields