Claiming back VAT without registering as a business?
Hi guys, Let me tell you a bit about my situation first of all. I want to start an online store selling clothes. Obiously i wouldnt make much money, if any during the first few months so this would be like a side project as i have a full time job during the day. I want to claim back VAT on stock i buy obiously but considering i have a full time job i dont really want to register a company in order to do so as it would increase my tax reduced from my wages in my job which might not be worth it as i might not even be selling anything in this online store. Would you guys recoment i pay the VAT out of my profit and not claim the VAT back or is there another option here i havent come across yet? Thanks in advance for you help! Joe.
You can’t claim back VAT if you are not registered.Until you think that your turnover is going to meet the Vat threshold I would add the vat into the cost price when marking up your prices.Just my opinion see what others think.
Ok thanks for that! would it not be illegal to trade online without beeing a regitered business?
I think you are confusing forming a LIMITED COMPANY (ie with companies house) and simply trading as a sole trader which is how most small businesses operate at the start. See the main section of this website about choosing a business structure.
Although you could register for VAT and reclaim the VAT on your stock, if you do this when you will need to add VAT to your sales price……..and this may not be the best thing in your circumstances.
Shameless plug but in my new book (http://www.taxcafebooks.co.uk/product.php?id=11019&prodid=kis) I discuss in some detail how to work out whether or not your business should be registered for VAT which you might find helpful.
James Smith [i]Chartered Accountant[/i] www.jamesesmith.co.uk --------------------------- Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
Thanks James. What i meant (which i didnt explain very well) was would i be able to trade without beeing registered as a sole trader or anything else. Would the "tax man" come after me, could i get in trouble?
And if i do become a soletrader, i need to register as self-employed. Would this be worth it considering i might be making a tiny profit out of this in the beggining? I would be down as having two jobs then – so would i have alot more taxt taken off my day jobs salary im guessing? If so is it alot?
As a sole trader your tax will be paid based on your annual profit and is nothing to do with your day job. You need to regsiter as a self employed person if you intend to trade. It’s not worth the risk not to regsiter.
Andrew Ripley CAT ACMI MIMI
One Stop Business Advisers Limited
Tel: 07900 404 702
Fax: 0871 7143 259
I bought a laptop for my friend from my bank account. My friend owns a shop, this means he can claim the vat back, but all the order details are based on me. So can I still claim the VAT back.
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