Letting Agency with a maintenance department claiming VAT on purchases prior to registration date
in a nutshell HMRC say that:
Goods can be reclaimed for up to 4 years prior to registration as long as the goods are still held or used to make other goods still held at time of registration. (can't reclaim eg: goods that you've completely used up before you registered for VAT (such as petrol, electricity or gas))
Services can be relaimed for up to 6 months prior to registration as long as the services are for your VAT taxable business purposes and goods they relate to are sill held.
Having read and read the VAT notices I could use your help in deciding whether the following are allowable or not (these are not treated as disbursements):
1) Propery listing/advertising
would it be allowable if the properties were still part of their portfolio at time of registration?
2) Credit referencing costs
again if the properties were still part of their portfolio at time of registration could they be allowable?
3) Franking machine rental
I'm thinking no as the rental for the month would be used up in that month? However the contract is in place to service the portfolio??
4) Portal & hosting subscriptions for properties
a mixture of 1 & 3??
5) goods purchased for maintenance jobs on properties
again as per 1 however the maintenance jobs are invoiced separately??
Numbers 1 to 4 are all supplies of services, and are therefore subject to the 6 month rule. The same applies to any maintenance work carried out. At 5, where you buy goods which are incorporated into the rental properties, the 4 year rule will not apply. Those goods are not 'in stock' at the time of registration.
If you still need to determine the optimum date of registration, do your calculations bearing the two tests in mind. I suspect, however, that you would not wish to back-date registration very far.
You may wish to consider Cash Accounting and/or Annual Accounting; both will help with cashflow. The link is here: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&columns=1&id=LIB_INFOS_PN_VAT, and the two HMRC Notices are 731 and 732.
