Hi Anyone who can help!
New Business venture started last August (2011)
I decided to go for Flat rate VAT as my other business ( partnership) had been using this to good effect, for my new venture, - buying in bags from France and wholesaling these in UK. It has been brought to my attention that I need to account for the VAT on these acquisitions on my VAT return, however I have tried to get a clear picture of this and I am very confused! Should I opt out of Flat rate in order to successfully sort this?and if so will I be able to retrospectively ask the VAT office to account for VAT going back 12 months on normal rate - not flat rate - as the consequences of having to pay 20% on all my old and current stock would be devastating for my fledgling business. I currently pay 8.5% flat rate.
Many many thanks
Alison
Replies (2)
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EU Purchases
I'm afraid you are right. You need to account for acquisition tax in Box 2 of your VAT return. Input tax cannot be claimed in Box 4 of the return unless the purchase relates to a capital expenditure goods costing more than £2,000 including VAT
You may be able to go back to HMRC to see if they will accept you re-calculating your VAT returns on the basis that the HMRC Public Notice is not very clear. The FRS was, after all, supposed to help small businesses.
Malcolm McFarlin