HMRC - likely to take issue with R&D VAT refund? HMRC - likely to take issue with R&D VAT refund?
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  1. #1

    Nervous Newbie


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    Default HMRC - likely to take issue with R&D VAT refund?

    Hi all,

    I do a bit of R&D from home, and produce very little output. So my VAT balance mostly looks negative.

    The R&D is for commercial product development. I'm hopeful that a commercially viable product will come out of the woodwork as a result, but I might not sell a single thing for two years.

    Are HMRC likely to take umbridge with frequent refunds? Is it worth the hassle for ~£1,000/year in VAT refunds? An accountant friend advised me that frequent refunds could trigger an audit.

    Note I'm considering registering for VAT, I haven't done it yet, but would be taking advantage of the 4-year rule if I did.

    Tom

  2. #2

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    ladymuck's Avatar
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    They could question why you're VAT registered after a while.

  3. #3

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    Quote Originally Posted by ladymuck View Post
    They could question why you're VAT registered after a while.
    The answer to which would be to reclaim business expenses for product development.

    Whether that is a good answer; I don't know.

  4. #4

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    Quote Originally Posted by tom667 View Post
    The answer to which would be to reclaim business expenses for product development.

    Whether that is a good answer; I don't know.
    When you register I believe you will be asked if you expect to be reclaiming more VAT than you are paying, in other words, if you expect it to be regular refunds, rather than payments.

    That would suggest this is not particularly unusual and is unlikely to be an issue.

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