[HeronsReach]

I have loads of receipts that I have collected during the six months we started our smallholding.They amount to a couple of grand in vat. Is it worth going vat registered to claim it back or is it a pain in the arse and not worth the effort. The bit that confuses me on the vat website is it says you cant be vat registred if you dont charge vat on goods you sell but I sell pigs and food is non vatable. All advice welcome

[jameslindsay]

I think from most of us small businesses that are VAT registered the advice would be to keep out of it if you can. I know a few busineeses that have took themselves out of it during the economic down turn. However, I don't think you can decide yes or no and if you make over so a certain amount of money then you must be registered.

[doganjo]

Yup,Turnover of £68K or more, or £20K in any quarter  This tells you all - http://www.hmrc.gov.uk/VAT/start/register/index.htm
and this will help you decide - http://online.businesslink.gov.uk/bdotg/action/logicToolProcessAnswers

Sometimes it's worth registering even if you don't gross £68K, so that you can claim back VAT you pay.  You are classed as charging VAT even if it is Zero rated.  It's so long since I worked in this that I can't remember if food is zero or exempt, but the website should tell you.

ah here it is - http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/BeginnersGuideToTax/DG_4015895

[gavo]

It's not complicated to register for vat;; you must have a business bank account and your smallholding MUST be registered with the inland revenue as a business also not complicated[call in to your local tax office and get the forms]

[Hermit]

I registered as a business on line.

[Rosemary]

You cannot register for VAT if the goods / services you provide are VAT exempt. Food is zero rated not exempt. If your turnover is above a certain limit you must register. Otherwise you can register voluntarily. It's worth it if you are making vatable purchases and sell food because you become a VAT reclaimer and basically you get a cheque from the VAT man once a quarter.

If you get a decent bit of software to keep your financial records on, and keep it up to date, it will do your VAT return for you. It's not a hassle then. I got software from my accountant - it cost less than 70GBP and it does my VAT return each quarter. It also does my annual accounts.

[bazzais]

I would say that most farmers and smallholders are VAT registered as its such a low profit and big spend industry.

Being VAT registered you will have to do your accounts every three months for VAT purposes.

You can register for VAT and claim past VAT expenditure but they do check to see if its for a valid purpose.  For example you may have to prove that the business is an ongoing one and your not just registering for those past purchases.  You will also have to prove that you are indeed a business and not registering just to claim VAT back.  For example if your spending was for a new horse stables or something outside of the agricultural bracket or deemed as a recreation or hobby, they will not grant you a VAT number.

Ta

Baz

[Simon O]

For someone like ourselves just about to move into a smallholding with a farm code, with likely a fair bit of capital expenditure at the start but no likelihood of income from the busness for a while, can all this VAT be claimed back. As the house is your place of business is claiming back for renovations on the house legitimate?

[doganjo]

No your house isn't your place of business, it is your home, and you happen to run a business from it.  You are allowed to claim an allowance for use of a room in the house as an office, including a share of the heat, light, mortgage etc, but renovations I would be doubtful about.  But you should certainly register, and you will be able to claim all VAT paid out on any expenditure (wholly and exclusively for the business)for a period of 6 months prior to registration.

[bazzais]

Its best to seek an accountants advise in any tax issue as there are often ways to avoid (not evade) tax through 'jargon' and good planning.

I bought our smallholding as a business, but only the land and outbuildings could be funded with money from my business accounts and resources.  The house itself had to be in my personal name and funded from cash outside the business.  However this was mainly because my business is a Ltd company and a legal entity on its own. 

One option I was given was to buy completely as a business then buy the house off the business, this would have meant I could have had renovations as business expenses - but then the new valuation of the property when I came to buy it off my business would have been reflected in that price.

I own my own Ltd company, but even so it cant buy me a house to live in as its a benefit in kind, which is illegal.

There are also funny rules in VAT stuff and renovations.  One being you cant claim VAT back for new fencing but you can for repairs of fencing.  You can't claim VAT for a building renovation (without abiding by a strict set of rules) but you can for a new build.

A good accountant will be able to take you through all this as its a minefield for the normal person who just wants to get on life, growing and living

Dont be frightened by it all though - VAT registration is the way forward if your spending alot on VAT'able goods, at least you have the option of trying to claim them back.  Keep all your receipts and your accountant will explain the terminology of how to explain how everything was spent and for what reason.

Ta

Baz

[Simon O]

Thanks again Baz; and ?Annie - it seems crazy that eg if I want to subdivide my fields with new fencing, purely for improving the function of the small-holding, that I cannot claim back the VAT..... I'll need to get the paperwork - and an accountant!

[doganjo]

You should be able to claim the vat back on your fencing if you are registered - I can't see why not.  I got mine back when I built my house - and that was round the garden.  Where can you find that information please?
Just found this fro those of you already registered

From April 2010 if you have an annual turnover of £100,000 or more, you will have to do your VAT returns online and pay your VAT electronically. It's the same form and just as secure as doing it on paper. All you have to do is register for Online Services, and there's lots of help available.

[Womble]

you will have to do your VAT returns online and pay your VAT electronically. It's the same form and just as secure as doing it on paper. All you have to do is register for Online Services, and there's lots of help available.

[/quote]

Except of course if you register for online VAT three weeks before the payment is due, make your first online return, and set up a direct debit to pay it at the same time......  This will result in the payment not being taken since it turns out you have to set up the direct debit in advance before you make the return....... which will result in you going into arrears on your VAT...... which will result in 

Don't worry folks - tax needn't be taxing (apparently!) 

[Jackie]

You can also claim back the fees against tax for employing an accountant, we do and its well worth employing an accountant.

If you need to find a 'good' accountant that knows about being tax exempt and VAT talk to your local Taxi drivers as they have done the leg work for you and ALWAYS have a good 'un. 

[plumseverywhere]

I registered Its Baaa-th Time and then swiftly de registered when I realised the implications  I think it makes sense if you are paying out lots of expense but for me I didnt' want to add VAT to my products as my aim is to keep price low and affordable for all.
that and the thought of 3 monthly returns to complete.
Tax needn't be taxing - yeah right, if you're blonde it is  !!!