First VAT Return - Reclaim Input Tax - The Book-keepers Forum (UK)

TartanElephant · Newbie

First VAT Return - Reclaim Input Tax

No · Veteran Member

TartanElephant wrote:
Hi, I was wondering if anyone can help.
My husband has just become VAT registered (well from the 1 Nov) and we are going through what we still have as assets at time of registration, so we can reclaim the VAT. I have a query regarding a car that we have on a personal contract hire. We initially paid a deposit of £3000 in April 2021 and pay monthly since. Can we reclaim the VAT (business use element) on the deposit? Can we also reclaim the VAT on the monthly payments since April 21?
Thank you.
Gill

No and no.

John the booky · Newbie

although the car is obviously a physical item, the vat is in respect of a monthly "hire" payment

A lease is a supply of services, but those services have been "consumed" prior to registration.

Pre reg vat for services is only available on services which form part of the taxable supply that commences on date of registration. The lease payments are monthly and so "expire" at point of payment. They are all non-existent at date of registration, so can't have Vat reclaimed.

-- Edited by John the booky on Friday 21st of October 2022 06:30:47 PM

-- Edited by John the booky on Friday 21st of October 2022 06:33:40 PM

-- Edited by John the booky on Friday 21st of October 2022 10:31:28 PM

No · Veteran Member

John the booky wrote:
.

(had the car been purchased outright then it would be goods rather than a service being brought into the vatable business, and so Vat would fall under the 6 year time limit for pre reg vat on goods. Also in that instance you are not required to restrict a claim to business use only)

-- Edited by John the booky on Friday 21st of October 2022 06:30:47 PM

-- Edited by John the booky on Friday 21st of October 2022 06:33:40 PM

Based on info in the post, you are so wrongwith your 'advice'. You should look up the legislation and the tests that require passing before advising such a course of action.

Shabana · Newbie

Hello,

If you're filing your first VAT return, make sure to reclaim input tax to reduce your VAT liability. Input tax is the VAT you've paid on business expenses, such as goods and services. By reclaiming input tax, you can reduce your VAT liability and improve your cash flow.

nikita_rai · Member

When filing your first VAT return, don't forget to claim input tax on your business expenses. This can reduce your VAT liability and increase your cash flow, so be sure to keep accurate records of all business expenses...