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Reclaiming VAT on old stock

I have a very small business with a very low turnover, which would not normally be VAT registered; however as I sell exclusively outside the EU, I registered for VAT at the outset of my self-employment, for the purpose of reclaiming VAT on purchases. I have some stock which I bought (initially for personal use and I still have the receipts, which qualify as retail VAT receipts) before I became self employed which I would like to introduce into the business for sale. I see it is possible to reclaim VAT on old stock acquired up to 4 years before you were VAT registered. However as I was not self employed during this period (ie not the same trading "entity"; not a trading entity at all, in fact!) I am guessing it will not be possible for me to reclaim the VAT on this old stock.

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Your sales are zero rated, and therefore you will be able to reclaim VAT on the goods that you buy for reale.

 

Assumng you are a sole trader, the supply was to you, and so I think you would be ok!

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By Olando
04th Aug 2012 22:28

Yes, I am a sole trader.

mawallace wrote:

Assumng you are a sole trader, the supply was to you, and so I think you would be ok!

Thanks. I had another look at HMRC's "rules" (http://www.hmrc.gov.uk/vat/start/register/purchases-before.htm), which speak of an individual, so I probably would be okay. Unfortunately they also say you should enter the old stock on your first VAT return, and I'm currently preparing my second! I wonder if they would stretch a point.

I have a follow-up question.

If I don't reclaim the VAT, should I exclude the figure for this old stock from the total in Box 7 of the return?

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04th Aug 2012 23:06

On second return....

Entry would just be a correction, this is fine assuming it is within the certain limits, I can only assume it is as your turnover is so low.  Put the VAT in box 4, nothing in box 7.

MtF

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By Olando
05th Aug 2012 04:02

Ha, yes!

mackthefork wrote:

Entry would just be a correction, this is fine assuming it is within the certain limits, I can only assume it is as your turnover is so low.  Put the VAT in box 4, nothing in box 7.

MtF

Yes, it's within the £10,000 limit mentioned here: http://www.hmrc.gov.uk/vat/managing/problems/corrections/correct-mistake....

So I guess I am ok to do this after all. Thanks for your help!

BTW, as I understand it, you are supposed to enter the figure for purchases excluding VAT in Box 7 - not leave blank.

 

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05th Aug 2012 22:13

Thats true but....

Olando wrote:

mackthefork wrote:

Entry would just be a correction, this is fine assuming it is within the certain limits, I can only assume it is as your turnover is so low.  Put the VAT in box 4, nothing in box 7.

MtF

Yes, it's within the £10,000 limit mentioned here: http://www.hmrc.gov.uk/vat/managing/problems/corrections/correct-mistake....

So I guess I am ok to do this after all. Thanks for your help!

BTW, as I understand it, you are supposed to enter the figure for purchases excluding VAT in Box 7 - not leave blank.

 

 

Usually when you are correcting an error the amount that would have gone is box 6 or 7 if the entry was placed on the correct return is supposed to be left off.

Regards

MtF

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By Olando
24th Aug 2012 19:03

Deleted

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