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Forum - Can you claim VAT from equipment you no longer need?

Can you claim VAT from equipment you no longer need?

Fri, 26/02/2010 - 15:15 — FishBowl

As many of you will know by now, the website http://www.inafishbowl.com follows 3 start up businesses through blog posts and video uploads, as well as Twitter feeds. Part of my reason for being on forums like this is because, through watching the start-ups, interesting topics/questions often come up, and I think it's a great opportunity to discuss things that are probably affecting a lot of start ups.

This question came from Fishbowl One (@fishbowlone) who is a guy called Matt who runs Sharabang Music, a band management company. You can find out more about him here: http://www.inafishbowl.co.uk/sharabang/

His question is: Can you claim VAT back from equipment you bought for your business pre-launch, but due to changes in concept you no longer need it?

Does anyone know the answer/have any advice?

Thanks,

Laura

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VATark's picture

This is not so easy to answer without knowing more about the equipment and why it is no longer needed - maybe I'm just one of those people that likes to have lots of data before giving anything that sounds like a definitive answer?

If the equipment was bought with the intention of using it to make sales on which VAT is chargeable, and the business is VAT registered, the VAT incurred should be recoverable.

If the equipment has been bought before the company is VAT registered, the VAT is only going to be recoverable if the equipment is on hand on the date of VAT registration.

If the equipment has been bought by Matt before the company was formed the company will have to reimburse Matt for the cost of the equipment to be able to recover the VAT.

What is going to happen to the equipment now that it is no longer needed? Will the company sell it? If it does it can recover the VAT and will have to remember to charge VAT on the sale of the item.

Hope that helps clarify things a bit - it is a rather more questions than answers response!

Robert

Fri, 26/02/2010 - 16:58 — VATark

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