VAT QUESTION

[KNM Computers]

hello everyone am i right in saying that if im registering voluntarily for VAT that if i buy normal rate products but sell zero rate products i could claim back vat on what i buy?

(i.e i buy a computer case that has normal rate vat but i sell it at zero rate vat, then i could claim back the vat on that computer case?)

[pure-wicked]

No, if the product is at zero rate vat then you won't have paid any vat for it when you purchased it.

You can't sell what you like at zero rate vat, there are a certain list of products. If your listed for VAT then your best bet would be to speak to your accountant.

Hope this helps Dave

[KNM Computers]

so if i got a computer case for example from my supplier for say £16.25 and with vat it is  £19.50...... but i sell it at say £25 with no vat. if i voluntarily registered for vat could i not claim back the vat from my supplier?

as i dont quite understand the bit here http://www.hmrc.gov.uk/vat/start/register/when-to-register.htm#5

if you sell zero-rated items and buy standard-rated items you would receive a VAT refund from HMRC

[wayzgoose]

If you are charged VAT when you buy something then 99.9% of the time you are going to have to charge VAT when you sell it. Only the VAT man wins when you register - generally!

[Baa]

if you sell zero-rated items and buy standard-rated items you would receive a VAT refund from HMRC

I *think* what that means is that if you sell Zero rated items, i.e. food then you can still reclaim any VAT paid on standard or other VAT rates for goods and services related to the Zero rated items i.e., P&P, and any standard rated items you might also purchase. Best to check with an accountant of course but that's what we were taught in bookkeeping. Personally I'd be seeking professional advice on whether it would suit your business to voluntarily register for VAT, for some professions and industries it does.

If you are not VAT registered (and should your business not need to be) you can still charge as much as a VAT registered business and gain the extra VAT charge puts on top is a bit of profit for you and not going back to the taxman. You also have the flexibility to drop your prices within the VAT range and it not be such a bind, although careful doing this because if you do have to become VAT registered, it's harder to put up prices than to reduce them.

Don't be dazzled by the opportunity to get cash back when you can make it on top and still be competitively priced because you have to give back the VAT you claim on your sales and there are accounting costs to be taken into, no pun intended, account. Definitely a question for an accountant.

[scotserve]

so if i got a computer case for example from my supplier for say £16.25 and with vat it is  £19.50...... but i sell it at say £25 with no vat. if i voluntarily registered for vat could i not claim back the vat from my supplier?

As soon as you register for VAT your sales will need to have VAT added - almost everything you sell will have to have VAT added
So you buy the case from your supplier at £19.50, you reclaim £3.25 VAT but you now sell that item at say £20 + VAT (£24) in simple terms you hand the Vat man £0.75p the difference between your incoming VAT and your outgoing VAT, the profit for you is £3.75 but if your not VAT registered you buy at £19.50 and sell at £24 your profit is £4.50.
The downside is if most of your clients are VAT registered they will want to be able to reclaim VAT from your invoices which they cant do unless you are registered.
But wait a minute the story doesnt end there - if you are not VAT registered and dont reclaim from your suppliers then this is an expenditure and is offset against tax so you win again.

As others have said zero rated only applies to certain goods and computer equipment is not one of them

Registering for VAT should never be done unless necessary or by consultation with an accountant 

[KNM Computers]

Thank you all, im not going VAT reg but was finding out for my brother, the computer case was just an example.... His busisness is hydrophonics supplies/equiptment