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Reclaiming VAT on personal expenses

I'm looking to set up a limited liability company and plan to immediately register it for VAT. Finances will be tight for the first 6 months before we sell anything so I want to stretch our (mine and my business partner's) initial investment as far as possible so I want to reclaim input VAT on everything I can.

I've done some web research on VAT and called the VAT helpline but I know that there are some really knowledgeable experts on this group so I would appreciate a sanity check on what I've been told. I'm afraid that I don't always trust helplines.

The official VAT site is pretty explicit about saying that to reclaim VAT then the goods or services must be supplied directly to the company and not to an individual (with a few exceptions like travel expenses). There is some expenditure where it will either be difficult or totally impossible for me to get it supplied to the company so I will need to pay for it personally and claim it back as expenses . The VAT office helpline said that, so long as I could prove that it is 100% for business use and I have a valid VAT receipt then I could still reclaim input tax regardless of the type of expense (i.e. not just travel expenses).

The main things I would want to claim are the fees for incorporating the company and registering domain names (since this has to be done before the company exists, and the suppliers need payment up front, then it seems

100% impossible that such services could ever be supplied to the company).

The other things I would want to claim are business fixed phone line rental (because the supplier I plan to use will only bill monthly against a credit card and I don't expect the company to have the credit worthiness to get a credit card in its own name initially) so I would need to use my card and reclaim the expenses each month. I'm unclear at this stage as to whether I would need todo the same with the mobile phone bill but I think that it is likely that I would.

If any of you VAT experts out there, and/or any small business people who have already proved it by doing it, could reassure me that I will be able to claim input tax on these expenses then I would be most grateful. Thanks.

- Julian

Reply to
Julian
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I've been there and assure you that the Vat helpline has always given me 'spot on' advice. Answers on a NG can not always be guaranteed.

Ken

Reply to
Ken

Well I've certainly been doing the above for our mobile phones for ages and it didn't even produce a raised eyebrow at the one and only VAT inspection I ever had.

Reply to
usenet

My understanding is that this isn't a reclaimable expense at all. The arguement is a bit circular as without paying this fee the company doesn't exist, so it can't be a legitimate expense of the company. I claimed mine and the VAT inspection didn't spot it, but my accounrtant told me that I shouldn't have claimed it

no it doesn't.

There was a recent European court case (well actually it isn't quite so recent anymore) that ruled that the receipts had to be made out in the name of the company. There was a bit of a panic that this would make reclaiming of anonymous expenses impossible unless they were paid for using a company card. The C&E didn't want this rule any more than companies, but it was suggested that they would have to change their rules to comply with the court, but nothing seems to have happened. Anyone konw if this is still on?

tim

Reply to
tim (moved to sweden)

Thanks for the reply Ken. It's good to hear that you rate the advice from the VAT helpline highly. I of course understand that there are no guarantees on a newsgroup. My strategy was going to be that if I got conflicting advice then I would ring the helpline again to double check but, if the NG advice tended to support the helpline advice then I would consider myself reassured. On the basis of what I've seen so far, I consider myself reassured!

- Julian

Reply to
Julian

Thanks Chris. I now feel pretty comfortable with the situation on the mobile phone and, by extrapolation, on the business fixed lines too. For both these I think it is dead easy to demonstrate that they are 100% for business use because I will have a seperate private mobile phone for which I personally will be paying the bill and I will also still have my existing home telephone account so in both cases it should be pretty open and shut that the business lines are 100% incremental charges entirely for use with my business.

- Julian

Reply to
Julian

Wow, that's strange, annoying and useful to know! Actually, I think I have a solution. I plan to use an all-in-one service that for a fixed fee will do the incorporation but also design a logo, letterhead and 10 page web site plus give web hosting for a year and do the first year's companies house filings. They offer this all-in-one package at a 40% discount off the price of buying each service independently so, assuming the company is flexible, I could probably ask them for the invoice to show the package as charging me the fee for the design and annual filing services with the company regisration thrown in for free. That way I assume that the graphic design and filing fees would be a reclaimable item.

D'oh! You are of course entirely right. What I should have said is that, after my experiences with trying to find a name for my new company, I am definitely going to immediately register the domain names before I then incorporate the company. The thing I found amazingly hard wasn't finding a company name that was unregistered at Companies house but rather to find a company name that didn't have the domains already registered. I suppose this makes sense since one is only competing with the rest of the UK to come up with a unique company name whereas one is competing with the rest of the world to find an unregistered domain. This has got me into the mindset that the domain names are so precious that I want to know that I have them before going to the expense of registering the company.

Obviously I'd be really interested in the answer to the above as well.

Thanks a lot for the answers Tim.

- Julian

Reply to
Julian

"Julian" wrote

Not necessarily - try looking for a ".co.uk" domain!! [Or a ".ltd.uk" ... ]

Reply to
Tim

Yeah, but I've told myself that I want the .com domain as well. Ultimately I hope that the company will be selling its own products (I do have a product idea that I believe is unique and useful) so I hope one day to need a global presence.

Does anyone really use the .ltd.uk domains? Personally I would value a .co.uk domain far more than a .ltd.uk but maybe that's just because I'm a bit of an old timer so am so used to .co.uk for UK companies.

- Julian

Reply to
Julian

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