Can somebody confirm for me please.....
If a sole trader purchases a van for the business, the vat on the purchase invoice can NOT be reclaimed via the vat return - but must be capitalised with the asset.
Thanks
Simon
SIMON ROTHSCHILD
Replies (4)
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VAT inclusive accounts ?
In 33 years I've only ever seen one instance of it, but some accountants draw up accounts "inclusive of VAT" with payments to HMRC as a trading expense.
I guess such an accountant would capitalise assets gross of VAT.
PS. The Self-assessment tax return actually has provision for drawing up accounts using gross VAT-inclusive values for a VAT registered business (ie. tick box at top of page 2 of SA103 for 2006/07).
Car or Van
Is it clearly a van? The accountant may have mistaken the purchase as a car purchase.
David Toohey
The Accountants Circle
And ...
... only the net cost capitalised.
We are assuming that the sole trader has a proper VAT invoice for the purchase of the van.
No
It should be reclaimed on the VAT return - unless he's on the flat rate scheme and the van cost less than £2,000