New Business start up costs, can I claim the VAT back?

in sanity

Hi all,

A bit of advice is needed if anybody could help me.

I have been researching setting up my own business now for the last 6 months, and have incured some expense in doing so. I have the company almost setup now, and should be trading within the next 3/4 weeks.

Can I submit these expenses through the newly formed company, ie claim the VAT back, and put the receipts/invoices in as an expenses claim?

Any help and advice would be most welcome.

Thanks

Mr. Incognito

Are you familiar with the VAT reclaim mechanism and what it actually is?

Vat is a value added tax on goods incurred my the end user. The reason a trader is entitled to a VAT reclaim is based on the fact that he is a middle man between the wholesaler and the end user- the customer. If you have incurred a VAT charge on items which you were the end user you cannot reclaim the VAT. If it is VAT on stock and trade you are selling on you can claim an input credit for this VAT. Basically you'd have to look at what VAT was charged on and in what circumstance.

In relation to your expenses, expenses incurred within three years prior to incorporation incurred "wholly and exclusively" for the trade are allowable expenses. That includes solicitors fees etc.

in sanity

SetantaL,

Thanks for the post. I certainly understand regarding my setup costs, and that they can be included as expenses. But I am still a little unsure about the VAT issue.

Are you saying that the VAT I have paid on the expenses to set up my company cannot be offset against my first VAT bill?!

Any further help/explanation you can provide would be most helpful

Thanks again

Mr. Incognito

Well it depends on the expenditure. VAT on Solicitors bills and machinery etc are reclaimable. To be honest I would think you would be able to reclaim VAT on most expenses relating to the set-up on which VAT was charged as long as they were incurred wholly for business purposes and there are a number of items which would be excluded by legislation- petrol costs etc.
The important thing is to get yourself VAT registered asap and then approach an accountant or a tax professional.

in sanity

SetantaL,

Will do, and I apprerciate your help, its very kind of you.

Thanks very much

Bren1609

You have to be registered for VAT to reclaim VAT. If your not registered for VAT today you cannot claim back the VAT from yesterday. Although it is allowable for income tax purposes. Or you could try and back date your vat registration.

in sanity

Bren1609

I am not yet VAT registered, and I have just about set up my ltd co, VAT registration will follow in the next week or so. There was little point in me being VAT registered personally, as I had to carry out feasibility studies regarding my proposed business venture, before deciding if it was worthwhile.

Under these circumstances do you think I could backdate my VAT No, I wouldnt have thought so, and where does this leave me regarding claiming VAT back on my feasibility studies, and set up costs??

Thanks for your reply, and any further help you can provide would be most welcome.

newbusiness

What expenses can I claim for?

You can claim for any business expenses which you have incurred in order to earn your profits. These expenses are normally referred to as revenue expenditure.

Revenue expenditure is your day to day running costs and covers such items as:

• Purchase of goods for resale
• Wages, rent, rates, repairs, lighting and heating etc.
• Running costs of vehicles or machinery used in the business
• Accountancy fees
• Interest paid on any monies borrowed to finance business expenses/items
• Lease payments on vehicles or machinery used in the business

If you are registered for VAT the expenses you claim should be exclusive of VAT.

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What expenses can’t I claim for?

The general rule is that you cannot claim for any private expenses i.e.

• Any expense, not wholly and exclusively paid for the purposes of the trade or profession
• Any private or domestic expenditure e.g. your own wages, food, clothing (except protective clothing), income tax etc.
• Business entertainment expenditure i.e. the provision of accommodation, food, drink or any other form of hospitality.

You cannot deduct capital expenditure in calculating your taxable profits, however you can claim what are known as capital allowances on certain expenditure.

Bren1609

It all depends on the following:
1. When did your business activity commence?
2. Are the vat invoices you intend to claim vat back on in your name or the Ltd co name?If the co is going to relaim the vat it has to be in the ltd co's name.
3. Ltd co has to be formed before you can register the co for vat.
4. Are you doing the vat registration yourself or is someone doing it for you?
5. Are you sure your business activity is eligible to relclaim vat? Certain business activities are vat exempt.

in sanity

Hi Bren1609

Thanks for the help again

Bren1609 wrote: »

It all depends on the following:
1. When did your business activity commence? - Not started trading yet, but have been conducting feasibility studies/market research/set-up for the last 6 months.
2. Are the vat invoices you intend to claim vat back on in your name or the Ltd co name?If the co is going to relaim the vat it has to be in the ltd co's name - most are in my own name, but could, I suppose be changed to the company name if required, some are simply receipts, fuel, travel expenses, hotels, advertising, phone bills, solicitors fees, etc - all are however solely for the purpose of feseability stidies/market research/set-up!!
3. Ltd co has to be formed before you can register the co for vat. - company will be formed over the next few days, doc's have been submitted to CRO, then when I have the Cert of Inc, I'll will apply for VAT No.
4. Are you doing the vat registration yourself or is someone doing it for you? - Will be doing it myself, seems relatively straight forward (I think?!)
5. Are you sure your business activity is eligible to relclaim vat? Certain business activities are vat exempt.

- Yeh, checked with a solicitor that VAT is reclaimable.

newbusiness

Thanks for the post

inspiron1977

Hi looking for some advice,i bought a van on hire purchase 5 years ago and have been paying VAT on it every month,the cost monthly was €250 + €50 VAT. I am not registered for vat and only bought the van because im in a band,am i entitled to claim back this vat which is around €3000.I will be making the last payment on the van next month.Any advice greatly appreiciated

djdeclan

inspiron1977 wrote: »

Hi looking for some advice,i bought a van on hire purchase 5 years ago and have been paying VAT on it every month,the cost monthly was €250 + €50 VAT. I am not registered for vat and only bought the van because im in a band,am i entitled to claim back this vat which is around €3000.I will be making the last payment on the van next month.Any advice greatly appreiciated

You are not registered for VAT; therefore you cannot reclaim the VAT on this, or indeed any other, item.