Loading Profile...
Flat Rate Scheme and £2000 capital purchase - inc. or ex. delivery costs?
I'm on the flat rate VAT scheme and thinking about buying several pieces of computer equipment. The cost is about £2000 and it should all last more than a year, so it I reckon it counts as a capital purchase. Question is: can I include the delivery costs as part of the capital purchase cost? This is important as the purchase is slightly more than £2000 including the delivery costs, but slightly less excluding it, and I want to be able to claim the VAT back even though I am on the flat rate scheme.
Thanks. Peter.
Thanks. Peter.
1
person has this question
I have this question, too!
Tell me when someone answers.
The more people who ask this question, the more it gets noticed.
The more people who ask this question, the more it gets noticed.
-
Inappropriate?1) If you want to be certain one way or the other I suggest you phone the VAT National Advice Helpline and ask them what the position is (ask for a reference number and keep a note of it).
2) If you don't want to do it yourself ask your accountant.
3) If you don't want to do it yourself and don't have an accountant ask me nicely and I'll do it!
4) But bear this in mind - from HMRC website http://www.hmrc.gov.uk/vat/start/sche...
These are the rules for claiming back VAT when you buy capital assets:
* It must be a single purchase of capital goods with a VAT-inclusive price of £2,000 or more. That doesn't mean you are restricted to claiming back the VAT on a single item - for example, you could buy a pizza oven, fridge and dishwasher, as long as you buy them at the same time from the same supplier and the price is more than £2,000 including VAT.
-
Inappropriate?Hi Peter,
Further to Stuart's reply, as he quite rightly says, it is a grey area!
As well as the VAT issue, I have also checked the financial reporting standards which look at how to capitalise an asset and the costs relating to buying that asset.
FRS 15, which deals with assets, says:
"Costs directly attributable to bringing the asset into working condition for its intended use, such as costs of transport... are included in depreciated replacement cost".
In plain English, I would say that means you can include the cost of delivery as part of the cost of the capital asset.
But I would agree with Stuart, do double-check with your accountant or the VAT office if you want to be belt-and-braces sure.
Kind regards,
Emily -
Inappropriate?Thanks Stuart / Emily.
What you are saying makes perfect sense, but when I called the helpline, the news wasn't good. They said that:
a, Delivery costs aren't included.
b, For computer equipment it has to be a single 'package'. Buying several pieces of computer equipment at the same time from the same supplier apparently doesn't count as a single purchase.
That seems to quite a tight interpretation of the rules, but I guess I'll have to think again about this. My initial idea was to buy all my IT equipment needs at the same time to claim the VAT back. But it looks like there's no point now.
Thanks. Peter.
-
Inappropriate?VAT Notice 733 http://customs.hmrc.gov.uk/channelsPo... has the following examples:
What counts as a single purchase of capital goods?
The normal VAT rules are used to determine whether any particular supply is one, or more than one, purchase and whether supplies are of goods or services.
Examples of a single purchase are:
* A computer package (computer, printer, camera, scanner, speakers etc.) bought as one package is one purchase of capital expenditure goods. If the package costs £2,000 or more (incl. VAT) then input tax can be claimed.
* Items of kitchen equipment (a pizza oven, a fridge and a dishwasher) bought for a restaurant. If all the items are from one supplier at one time, then they count as one purchase of capital expenditure goods. If they are from three different suppliers, or at three different times then they will be three purchases and each must be £2,000 or more (inc VAT) to qualify for a reclaim of VAT.
My advice would be to add another item to the package or why not ask the supplier to charge you >£2000. They'll be happy and you will be as well!
I’m not giving in on this one!
-
Inappropriate?Hi Peter,
That interpretation from HMRC does seem very tight, particularly in the light of what Stuart has said about examples of a single purchase.
I agree with Stuart, you could add another item to the package or treat yourself to a more expensive version of an item you need, e.g. a computer with higher spec.
Or, if you're not already on the VAT flat rate scheme, don't apply to join until after you've filed your first return and claimed back all the input VAT on your new assets!
If you're already in the scheme, you could leave, but then you couldn't rejoin until 12 months have elapsed.
Kind regards,
Emily -
Inappropriate?According to the guy at the VAT helpline, if there is a printer + scanner + printer etc. that comes to more than £2,000, that is fine as it counts a single purchase. But I am buying several computers that comes to about £2,000 in total, but far less individually. According to HMRC each computer is a separate purchase, so each purchase is well below £2,000.
Regards. Peter.
EMPLOYEE
