Case Study - Choosing the Correct Date of Registration
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13th February 2014
An interesting case
that I have dealt with this week considered the date of registration
partnership that had refurbished a property and was intending to make
VATable supplies of that property.
The partnership had incurred VAT on
invoices from builders, plumbers, electricians and many other traders
years in refurbishing a holiday home that would be let to third
parties. The accountant contacted us on our helpline to check what
forms he should
complete for the application and whether the VAT on costs incurred to
could be recovered as pre-registration input VAT under the 4-year rule.
On discussion it became apparent that the
accountant had not appreciated that the costs incurred from the
were services and the six month pre-registration rule would apply. This
meant that if he chose the current date as the date of registration
mean a significant amount of VAT on costs that the partnership incurred
We advised the accountant to backdate the
VAT registration and by doing so secured VAT recovery. If the
had continued down the path that he was intending it would have been
difficult (and potentially impossible) to rectify the issue.
This case is not in isolation and
throughout the year we receive similar queries. We recommend that if
client is incurring VATable
costs and is considering VAT registration at some point in the future
carefully consider the date you are advising them to be registered with
About the Author
VAT People are leading VAT and Customs Duty
consultants based in the
North West of England. We work with a wide range of businesses
throughout the UK as well as assisting our accountancy colleagues to
unravel the thorny VAT issues for their clients. We are one of the UK's
largest and most comprehensive sources of VAT and Customs advice, our
consultancy team having over 140
years of experience in VAT and Customs
gained in either HMRC or a Big 4 accountancy practice environment.
Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.
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Article Published/Sorted/Amended on Scopulus 2014-02-18 09:07:10 in Tax Articles