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I do not sell any goods that are chargeable for VAT. I am not currently registered for VAT. I know that you cannot claim VAT refunds without being registered for VAT, and charging it on applicable goods. Can I register for VAT to claim back VAT without selling VAT applicable goods?

  • What do you do? – Nigel Harper Jul 31 '15 at 12:35
  • @NigelHarper That's a little difficult to define (and a cause of some debate). Suffice to say the company currently generates a loss (brought to zero by regular investments) and makes only a small revenue from advertising space with Google Adsense. – Lewis Goddard Jul 31 '15 at 13:31
  • I'm voting to close this question as off-topic because it appears to be about corporate finance, not personal finance. – dg99 Aug 3 '15 at 23:27
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As far as I know any business can register for VAT regardless of the nature of the business. If all the goods you sell (or services you provide) are VAT-exempt or zero-rated then you will get refunds from HMRC on VAT your business pays.

Any business whose non-VAT exempt turnover (which would include zero-rated goods and services provided) exceeds the registration threshold must register, again even if that means they are "forced" to claim refunds.

So the only question would be whether your rather nebulous activities were enough to qualify you as a business or organisation to which the VAT regime applies at all.

The one-liner answer to that is

generally, if goods or services are provided in return for a charge, there’s a business activity for VAT purposes

Inevitably there's a much bigger body of statute and case law and it won't always be obvious whether the one-liner answer applies or not to a particular activity so it may be necessary to seek specialist advice.

  • What would define whether or not the VAT regime applies? The company is registered in the UK, and files all the normal accounts. – Lewis Goddard Jul 31 '15 at 13:41
  • @LewisGoddard see edit. AIUI it's more about what a company (or an individual) actually does. – Nigel Harper Jul 31 '15 at 15:04
  • Okay, so their rejection of my application does seem to allude to the idea that we don't sell anything, so we're not eligible. I'm not entirely sure this is accurate so I'll take it up with my solicitor and get some professional advice. – Lewis Goddard Jul 31 '15 at 15:23
  • HMRC has sent me a message specifically stating that If you are not making taxable supplies or the only supplies that you are making are exempt supplies, you are not eligible to be registered for VAT. – Lewis Goddard Jul 31 '15 at 17:16
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IANAL, I have not been VAT registered myself but this is what I have picked up from various sources. You might want to confirm things with your solicitor or accountant.

As I understand it there is a critical difference between supplying zero-rated goods/services and supplying exempt goods/services.

If the goods/services are zero-rated then the normal VAT rules apply, you charge VAT on your outputs (at a rate of 0%) and can claim back VAT on your inputs (at whatever rate it was charged at, depending on the type of goods..

If the goods/services are exempt you don't charge and VAT on your outputs and can't claim back any VAT on your inputs.

(Things get complicated if you have a mixture of exempt and non-exempt outputs)

According to http://oko.uk/blog/adsense-vat-explained adsense income is a buisness to buisness transaction with a company in another EU country and so from a supplier point of view (you are the supplier, google is the customer) it counts as a zero-rated transaction.

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You cannot "claim back" VAT. What happens is that if you sell goods with VAT and charge customers VAT, you would have to send that VAT straight to HMRC, but if your business itself paid VAT, then you already paid VAT, so you have to send less.

As an example, if you send an invoice for £10,000 plus £2,000 VAT, and you paid yourself £500 VAT on business related expenses, then you need to send £2,000 - £500 = £1,500 to HMRC.

But if you don't send invoices including VAT, then you owe HMRC £0. Any VAT you paid on business related expenses is lost; HMRC won't pay you money.

BTW. Only VAT on business related expenses can be deducted. So if you want to be "smart", register for VAT and get the VAT on your weekly shopping bill refunded, forget it.

  • I know of several companies, one of which I work for, that sells almost exclusively VAT free goods, and they definitely get sent a payment, not the other way around. I am aware that VAT deductions are only for business expenses. – Lewis Goddard Aug 2 '15 at 10:34
  • This is absolutely not true. If a VAT-registered business invoices less VAT than it pays in any VAT period then HMRC will issue a repayment. See gov.uk/vat-repayments – Nigel Harper Aug 3 '15 at 9:59

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