Reclaim VAT on capital assets
Important: This information only applies if you are registered on the Flat Rate Scheme for VAT.
On 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 GBP or more.
The rules for reclaiming VAT
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It must be a single purchase of capital goods with a VAT-inclusive price of 2,000 GBP 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.
A computer package (computer, printer, camera, scanner, speakers, and so on) bought as one package from one supplier is one purchase of capital expenditure goods.
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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 petrol, 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 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.
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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, a van that you allow employees to use on weekends.
- 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.
These include computer equipment with a VAT-exclusive price of 50,000 GBP or more,
or land and buildings, civil engineering works and refurbishments with a VAT-exclusive value of 250,000 GBP or more.
For more information, go to the HMRC web site.
To reclaim VAT:
- Create a bill for the reclaimable capital expenditures.
- Click the VAT Reclaimable checkbox at the top of the Bill page.
- Complete the form as you normally do.
Note: The VAT Reclaimable checkbox applies to the entire bill, so you must create a separate bill for any non-reclaimable expenditures.
QuickBooks adds the VAT amounts to Box 4 of your VAT 100 Report to reclaim this tax on your next VAT return.