After registration is there output tax due on eligible goods purchased pre-registration?
Lyndon Pugh
Replies (3)
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Yes ... if you sell them
I may be missing the point of your question and merely stating the obvious, but after registration, you have to charge VAT at the relevant rate on all your sales (also known as outputs). By the same token, you can reclaim VAT on purchases before registration if they were still in existence at the date of registration - basically, stock and fixed assets.
Sometimes
The supply of goods on which input VAT was incurred when purchased but was "non-deductible input tax" is an exempt supply.
"Non-deductible input tax" includes VAT that could not be recovered because the person was not registered for VAT. However, some input tax incurred pre-registration is recoverable when the person registers. This includes any VAT incurred on goods purchased less than 3 years prior to registration that are still "on hand" at the time of registration.
Therefore, if you have goods that were purchased less than 3 years before you registered you charge VAT on the sale, but should have recovered VAT on the purchase in your first VAT return.
If you have goods that were purchased more than 3 years before you registered you cannot recover the VAT on the purchase but the sale is exempt from VAT.
Hope that helps.
Regards
Paul Taylor
Senior VAT Consultant
Dains