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Post Info TOPIC: Can VAT be reclaimed on assets purchased by the Director?
morgwick


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Can VAT be reclaimed on assets purchased by the Director?
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Hi All,

A new limited company is formed 1/9/13 - became VAT registered in Nov 2013.

The one and only director bought computers etc in August 2013, before company formed.

The assets can be introduced through an expenses claim, but can VAT be reclaimed if the invoices are not in the company name, as company wasn't formed at the time?

Thanks



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Gill
MarkS


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Yes you can.

Provided the cost of the asset is fully reimbursed to the director and the asset is brought into use in the business on incorporation.

See the following link (see part re "pre-incorporation" down near bottom of page)

http://www.hmrc.gov.uk/manuals/vitmanual/vit32000.htm#IDA3EW0H

 



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
morgwick


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Thanks again mark. Another question... if there are business expenses after company has been formed but these expenses are just in the directors name, not the company, can you reclaim the Vat? I've been informed by Hmrc no but someone else says you can?

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Gill
MarkS


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If is for small expenditure then you can claim it without it being in the company's name, less than £25.

If however more than this then technically HMRC could prevent the VAT being claimed as not in the name of the ltd company.  

However I would claim it in the following circumstances and argue the case with HMRC should they ever raise it

1. Was it just a few expenses after the company started when the director wasnt doing what they should have but everything is properly invoiced to the company going forward.

2. Was the director fully reimbursed by the limited company.

3. Is the expenditure of the type clearly that it is the business' cost eg have they dealt with the supplier since, is it a purchase that the business would normally make, etc.

 



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
morgwick


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Thanks Mark, but no they have messed up the accounts for the whole year using it as a personal account. Ive been quite strict in the end because they have a vat inspection on monday. They've made lots of errors on the vat as it is! Unfortunately not a straight forward job

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Gill
MarkS


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Assume is the client you speak about in another thread.

If that is the case then you just need to hope that the VAT inspection is half asleep on Monday.



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Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
morgwick


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Yes that's the one. Client has always been in a reclaim position hence triggering the inspection, but its not looking good as they have reclaimed more than they should have from the records provided. Have warned the client.

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Gill
MarkS


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Yes you need to careful if you are in a reclaim position as unless you buy something large, are making a loss or selling zero rates items then you should always be paying VAT over.

As a reclaim will inevitably at some point warrant an inquiry by the VATman.



__________________

Mark Stewart CA

http://stewartaccounting.co.uk/

Providing accounting, bookkeeping, payroll and tax services to small and medium sized businesses across Central Scotland and beyond.
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