Hi, I know that you can reclaim VAT on equipment / assets purchased within 3 years before VAT registration, but I am confused as to what amount of VAT can be reclaimed.
I thought it was the amount as per the invoice, i.e. the actual amount charged at the point of purchase. However someone has told me that you reclaim the VAT on the assets "reasonable value" as at the date of registration, i.e. reclaim VAT on the NBV.
Could anyone clarify this for me, because if an asset was bought 3 years ago, after depreciation was taken off, the NBV at the date of registration is going to be a lot less, resulting in less VAT reclaimable.
Before giving any other answer, just to clarify for others who may be reading this, we are talking about revenue generating fixed assets purchased within three years of the registration date and that are still available for use wholly and exclusively within the business at the date of VAT registration.
In this instance I believe that your adviser is wrong. The amount of VAT to be reclaimed is that from the original invoice.
The amount of VAT that may be reclaimed should be no more and no less than that suffered already by the company that sold the asset.
All that is being applied here is that the VAT suffered for legitimately purchased assets is being applied to the first VAT return after registration.
Any reduction in the amount claimed will mean that the revenue receives more than 17.5% (or 15% dependant on when it was purchased) of the original purchase price.
Evidence that you require is the original invoice, bank statement showing that the goods were purchased by the business and the knowledge that the asset is still retained by the business at the date of registration.
Cheers,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I had a similar situation a couple of years ago and my client claimed the VAT back for a VAN purchase on his first VAt return. I did check with the accountant and he said it was OK to do, the client did produce the orginal invoice etc as proof and the Van was still being used wholly for business.
Like Shaun says you must have the original invoice as proof that VAt was actually charge and the amount and check the date of the invoice to clarify it is less than 3 years old.
