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Can VAT on a capital purchase (bought privately before involvement with company) be reclaimed once bought into the company?

Can VAT on a capital purchase (bought privately...


I have a friend who is taking over a limited, vat registered company shortly. They are keen to invest in some capital equipment for their new company as it is on offer. Likelihood is that the equipment would be bought before purchasing the company itself.

If the capital is bought privately at this point for the company, can the VAT be reclaimed once the company itself has been bought?



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26th Feb 2016 12:56

Well there's probably a way round it, but is your client really willing to commit to a purchase of the plant while his purchase of the company might still fall through?

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26th Feb 2016 12:58

I would say so as it is probably a piece that he can use in his sole trader work, if the acquisition fell through.

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26th Feb 2016 12:57

You say the client is taking over the business. But go on to say that they will also be buying the assets separately.

Is this the client buying the business as a TOGC or not?

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26th Feb 2016 13:04

Yes. It is being purchased as a going concern.



He is currently a sole trader specialising in photography. An opportunity has arisen to acquire a local limited company. He wants to buy a new camera for use in this new company and would like to know if he can reclaim the VAT back, once he is director of said company. If the company acquisition falls through, he will still have the camera for his sole trader use.



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By JimFerd
26th Feb 2016 13:02

I know VAT on pre-incorporation expenditure can be claimed in line with the normal rules, but I don't know if this is the case for a TOGC.

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26th Feb 2016 13:10

Is he not VAT registered as a sole trader?

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26th Feb 2016 13:20

Can I really go back to basics?

Surely if he buys it personally, the invoice is not in the name of the company (the VAT registered entity) so, why would the company be able to claim the VAT back?

If he funds it personally but the company buys it, different thing entirely.

But then VAT's not my I expect the deluge of replies to show! 

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26th Feb 2016 15:12


The item must be bought for the company, and if there is no certainty that the takeover will occur, then this must be in doubt. If the sole trader invested the money in the company, and the company purchased the item, that is more likely to meet the conditions for input tax recovery.

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