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Backdated VAT Registration

Backdated VAT Registration

Hi

I purchased a franchise about a year ago and am considering voluntary registration for VAT, backdating registration to the time of purchase. Sales and expenses are such that it would be worth my while to do so. Is there a catch?

I'm particularly concerned about future VAT. The franchise may well fail and I may have little output VAT to declare in the future. Will HMRC take a dim view of this when it becomes apparent - their being out of pocket - and what should I declare on my VAT registration form?

Any help very much appreciated.

Jon
Jon

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By Anonymous
17th Oct 2008 18:14

Thanks to everyone for taking the time to reply. That's been really helpful.

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16th Oct 2008 10:29

Vote Democrat
Barak obviously has a better grip on the economy and taxation issues than Senator McCain gives him credit for.

you can indeed backdate a voluntary (or indeed compulsory) VAT registration, you do need to do this on the original application as once registered you cannot then ask for a backdating.

The only pitfalls are likely for the most part to be the ones you know about i.e. you will need to account for VAT on all supplies made since registration (if you have b2b clients then you can always ask if they'll accept a revised or VAT only invoice at this stage).

The only thing to mention that you may not have thought of is that if you cease trading then you'll need to deregister and possibly account for VAT on the market value of any taxable stock or assets you have on hand. This probably wont be too much of an issue as theres a deminimis level of £1000 VAT, so unless the assets and goods total value is over £5714 exc. VAT you wont need to account for any, and I'd imagine a lot of your tax will be on services (franchise cost etc which wont have a market value for you).

Declare the proper facts on your registration form, as long as you're in business they have to register you, and as long as you can prove either that you were trading, or had an intention to trade, at the date you wish to register from then the policy is to accept the registration.

Registrations where businesses register just to recover VAT to mitigate failiure of a business is not uncommon and it's also of course not uncommon for new businesses to fail, so if the worst does happen then HMRC may take a dim view of being out of pocket but there wont be anything they can do about it, as long as you've been honest in answer to their queries and on the registration form.

If they do tell you that you can't register or backdate it, then chances are that you're dealing with an inexperienced officer, so if that does happen (which it shouldn't) then just ask for a reconsideration or for it to be passed through a manager. If you need to quote law at them at any point then you'll be relying on VAT Act 1994, Schedule 1, Para 9. This basically says that you're entitled to register if in business and allows registration either from the date of application or "such earlier date as may be agreed between them [HMRC] and him [you]".

Hope this helps

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By Anonymous
15th Oct 2008 23:24

Yes we can!!

Steven

I think you will find that backdated VAT registrations are allowed for voluntary registrations too. The only restriction is that the date cannot be more than 3 years before the date of the application.

You will find this on page 3 of the VAT 1 guidance notes that accompany the VAT registration form. In note 13 – Are you applying for voluntary registration, it says: “You can apply for voluntary registration where your turnover does not go over the registration threshold, or where you intend to trade but your business has not started yet.”

“Enter the date you would like to be registered from. We cannot accept a date that is more than three years before the date of your application. Sometimes we can ask for evidence from you about the supplies that you are making or intending to make.”

Now, back to the campaign trail!!

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15th Oct 2008 20:55

backdate voluntary registration??
I think you will find that backdated VAT registrations are only allowed where you should have registered for VAT.

If you don't have to register, you can register voluntarily but this can only be from when the application is submitted.

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