Accountant stated my PC Purchase cannot have VAT reimbursed on Flat Rate VAT scheme.. Accountant stated my PC Purchase cannot have VAT reimbursed on Flat Rate VAT scheme..
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  1. #1

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    Default Accountant stated my PC Purchase cannot have VAT reimbursed on Flat Rate VAT scheme..

    Made some enquiries regarding a recent purchase of a Windows desktop PC for £2800 and the accountant told me that I cannot claim the VAT back on this item due to my Limited company being on the Flat VAT scheme.

    The invoice was addressed to my company and I read on the HMRC website that you can claim VAT back for items provided that they are classed as Capital Assets and that they are over £2K in value on the invoice (which my desktop PC clearly is), there are other rules such as if the capital asset is going to be used up within a year then its not a a capital asset (eg printer ink). But its a desktop PC goddam it !! surely its going to be classed as a capital asset, I'm going to use it for work for my company !

    Should I go back to my accountant and quiz this ? or does the accountant know something that I don't ?

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    Phone up the VAT helpline and ask them about your particular purchase.

    Then go back to your accountant and query them again.

    If accountant doesn't explain why in clear English why the VAT people are wrong, then give them notice and find another accountant.
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    Does this include software and lots of added gizmos or is the PC £2800 alone on a single invoice?
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    Quote Originally Posted by SueEllen View Post
    Phone up the VAT helpline and ask them about your particular purchase.

    Then go back to your accountant and query them again.

    If accountant doesn't explain why in clear English why the VAT people are wrong, then give them notice and find another accountant.
    To back that up, ask the VAT people for the call reference number and give it to the accountant. That way, there's a record on the HMRC system of what the VAT people have told you.

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    If it was a single transaction purchase then you should be able to claim the VAT back.

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    Quote Originally Posted by northernladuk View Post
    Does this include software and lots of added gizmos or is the PC £2800 alone on a single invoice?
    The PC comes with Office 2010 as an extra, Windows 7, mouse, keyboard and that is all really, the usual stuff all in one invoce with the graphics card etc itemised.

    I don't understand why the accountant stated this.

    Would calling up the VAT helpline actually do me any good ? are they going to be any more clued up about PCs etc as Capital Assets ?

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    Quote Originally Posted by Craig@InTouch View Post
    If it was a single transaction purchase then you should be able to claim the VAT back.
    NOTE: My company is on the Flat Rate scheme... you really think I can claim the VAT back for the PC as a capital asset ?

    Yes it was just the Windows PC on the single invoice, with my company name on the top and all the hard disks, graphics card etc itemised on the same single invoice addresssed to my flat rate VAT limited company.

    Also I have a completely different invoice with two large monitors which cost around £2400 gross with monitor speakers, you reckon I could claim for this invoice also ? Its to be used with the PC I bought ????

    I would be really disappointed if it turned out that I was entitled to being re-inbursed with VAT.
    For a previous question to my accountants I was fobbed off initially when I simply asked my accountant about Entrpreneurs Relief - I got told about money laundering procedures and that no I couldn't - I eventually spoke to someone who seemed to know something about it. Money Laundering .. were they crazy ! they were just trying to scare me off because they either could not be bothered or didn't know but I was willing to let that one go.

    I'm interested in seeing how this all pans out, if I am not satisfied in the answer I get I'm going to change accountants.

    In Touch sound good ! you've always given sound advice.

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    Quote Originally Posted by sbakoola View Post
    NOTE: My company is on the Flat Rate scheme... you really think I can claim the VAT back for the PC as a capital asset ?

    Yes it was just the Windows PC on the single invoice, with my company name on the top and all the hard disks, graphics card etc itemised on the same single invoice addresssed to my flat rate VAT limited company.

    Also I have a completely different invoice with two large monitors which cost around £2400 gross with monitor speakers, you reckon I could claim for this invoice also ? Its to be used with the PC I bought ????

    I would be really disappointed if it turned out that I was entitled to being re-inbursed with VAT.
    For a previous question to my accountants I was fobbed off initially when I simply asked my accountant about Entrpreneurs Relief - I got told about money laundering procedures and that no I couldn't - I eventually spoke to someone who seemed to know something about it. Money Laundering .. were they crazy ! they were just trying to scare me off because they either could not be bothered or didn't know but I was willing to let that one go.

    I'm interested in seeing how this all pans out, if I am not satisfied in the answer I get I'm going to change accountants.

    In Touch sound good ! you've always given sound advice.
    As Craig says, you can definitely claim back the VAT on a capital asset even if you're under the flat rate scheme. Direct your accountant here: HM Revenue & Customs: Flat Rate Scheme for VAT

    If you use the Flat Rate Scheme, you can't normally claim back the VAT you spend on capital assets you buy for your business. This is already taken into account in the flat rate percentage for your type of business. However, you may be able to claim back the VAT on certain capital asset purchases with a VAT-inclusive price of £2,000 or more.

    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.

    It must be a purchase of capital goods, not services. Capital goods are goods you can use in the business but are not used up by it - for example, a van, computer or bottling machine are capital goods, but not the fuel, printer ink or bottles that go in them. A van leased or hired to you is a continuous supply of services, but one bought on hire purchase is considered a supply of capital goods.

    You can't claim back VAT on goods that you intend to either resell, or incorporate into other goods to supply on to someone else.

    You can't claim back VAT on goods that you will let, lease or hire out - for example, a bouncy castle.

    You can't claim back VAT on goods that you intend to use up (consume) within a year.

    Building materials and work are not capital goods. You can't claim back the VAT if you have building work done (even if it includes expenditure on materials), and you can't claim back the VAT if you buy building materials yourself for someone else to build with.

    As long as all the other conditions are met, you can claim back all the VAT even if the goods will have some private use. For example, if you buy a van but employees are allowed free use at weekends to move private belongings, you can still claim back all the VAT.

    There is an upper limit on claims for certain items. If you buy something that falls within the Capital Goods Scheme you must write and tell HMRC and leave the Flat Rate Scheme immediately. Goods that fall within the Capital Goods Scheme are computers or items of computer equipment with a VAT-exclusive price of £50,000 or more, or land and buildings, civil engineering works and refurbishments with a VAT-exclusive value of £250,000 or more.

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    Quote Originally Posted by sbakoola View Post
    NOTE: My company is on the Flat Rate scheme... you really think I can claim the VAT back for the PC as a capital asset ?
    Yes but don't take our word for it, read what HMRC say about Claiming back VAT on capital assets. It sounds pretty clear, does this sound like your purchase? You could call the VAT helpline and get their opinion. When you have done this, present this to your accountant and ask them to explain their advice. If they can't give you a reasonable explanation then I would sack them for their incompetence.

    Quote Originally Posted by sbakoola View Post
    Also I have a completely different invoice with two large monitors which cost around £2400 gross with monitor speakers, you reckon I could claim for this invoice also ? Its to be used with the PC I bought ????
    Yes.

    All this is presuming that you have a clear justification as to why it's "wholly and exclusively" for business use and would be an allowable business expense by HMRC.

  10. #10

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    thanks for the advice.

    Just read this

    Capital assets - the Capital Goods Scheme for reclaiming VAT

    Computers
    The scheme only applies to individual computers, or items of computer equipment, that cost £50,000 (excluding VAT) or more. It doesn't cover something like a network where the total cost of the server and all the computers and printers is £50,000 or more but each individual item is less than £50,000. Nor does it cover computerised equipment (for example, a computerised telephone exchange or computer-controlled blast furnace) or computer software.
    You can find out more about the way the scheme applies to computers and computer equipment at section 3.5 of Notice 706/2 Capital Goods Scheme.
    Last edited by sbakoola; 7th December 2011 at 08:30.

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