Buying a PC excluding VAT

  tammer 10:32 19 Jan 08
Locked

I'd imagine this is a complicated area, but I hope that you can help or point me in the right direction.

I have a friend who is self employed and I've always thought that if she was to buy a laptop, primarily for use in her trade, she should be able to avoid paying VAT on it.

Am I correct, and if so, how would she actually go about buying a laptop excl. VAT from somewhere like Morgan Computers?

  wee eddie 10:41 19 Jan 08

Everyone pays VAT upfront, Registered or not.

When you pay the VAT on your Sales, you claim back the VAT you have paid on your Input/Materials.

  isca2 10:42 19 Jan 08

I am no expert, but would have thought that the business has to be registered with the VAT authorities so that VAT expenditure can be offset against VAT inwards. Perhaps someone can comment further ?

  ajm 11:19 19 Jan 08

Everyone has to pay the INC VAT price.

If your friend is VAT registered, she can claim back the VAT elemement of the value. Also the net amount can be used as Computer Equipment Asset for the business and can be deducted as an on-going expense, through depreciation of a certain % every year. Her accountant, if she has one, will be able to.

If she isnt VAT registered, then she can claim the expense as a business expense. An accountant will be able to guide as to the best way.

  tammer 11:23 19 Jan 08

Thank you for this help.

  dms05 12:02 19 Jan 08

If it's a new start business their are many allowances against initial set up costs (as much as 40% on capital equipment like computers) and her accountant should be offering her advice on subjects like this.

  Cymro. 14:13 19 Jan 08

There used to be a scam when you found a friend that was a sole trader but VAT registered and then get him to say that it was him who had bought the item. He would them claim back the VAT on it and give you the money.

Such things were not so unusual in the early days of VAT but the tax authorities are much more careful these days so beware of trying it.

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