Flat Rate VAT Scheme and Reclaiming Capital Assets

First published on 02 November 2019 by Alastair
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If you are a small, VAT registered company, you may have opted to join the Flat Rate Scheme for VAT.  This means you pay a fixed rate of VAT to HMRC based on sales, and don’t reclaim any VAT incurred on expenses. However, are you aware that there is an exception to the rule of being unable to reclaim VAT on expenses? 

Where certain capital assets over £2,000 (including VAT) are purchased, you can reclaim the VAT, provided you meet certain criteria, viz,

  • It must be a single purchase, although
    • this can still be for a number of items, so long as all items are from one supplier at the one time, and detailed on the same invoice - for example if you are in catering and purchase a cooker, dishwasher and freezer at the same time from the same supplier.
  • The value must be over £2,000 including VAT.
  • It must not be a service.

If all three criteria are met, then you can claim the input tax in box 4 of your VAT return.

If you wish to discuss the VAT flat rate scheme, or anything else in relation to VAT, then please contact us (01383 621118) to see how we can help.

Julie Downie, Senior Accounts Manager

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