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VAT on Pre-Incorporation Expenditure
Newsletter issue - July 08.
As you prepare to set up your company you may buy assets ready for that company to use, or pay for services such as legal or accountancy, that relate to the new business. You can reclaim the VAT incurred on those goods and services you purchased personally for the company if all of the following conditions apply:
1. You become a director, company secretary or employee of the company, and the company fully reimburses you for the goods and services you bought on its behalf.
2. You were not VAT registered when you made the purchases and have not used those items for any other purpose.
3. You have not reclaimed the VAT on those purchases through another business.
4. The company must reclaim the VAT in its first VAT return after becoming VAT registered.
There are also some restrictions on the goods and services on which the VAT can be reclaimed.
Goods must be:
- held at the date the company becomes VAT registered;
- purchased within 3 years of the date of that VAT registration;
- used by the company for its trade.
Services must be:
- purchased for the purposes of the company's business;
- acquired within 6 months of the date the company becomes VAT registered;
- not recharged on to a customer before the company became VAT registered.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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