Flat Rate Scheme – planning and reclaiming VAT on the purchase of capital goods.

If you are using the Flat Rate Scheme for VAT then you will be aware that you cannot reclaim input VAT on your purchases unless they are a single purchase of a capital nature and in excess of £2,000 inclusive of VAT.

However the rules state that purchases of a capital nature made at the same time from the same supplier on the same invoice are deemed to be a single purchase for VAT Flat Rate Scheme purposes.

For example if you purchase a computer package comprising a computer, a printer, external hard drive, digital camera and speaker systems which costs more than £2,000 (incl. VAT) then the VAT can be reclaimed.

Similarly you may purchase a number of separate items for example a pizza oven , a fridge and a dishwasher. If these are all purchased from the same store on the same day and are shown on the same invoice if the total cost of these items is in excess of £2,000 (incl. VAT) then you can reclaim the VAT.

So if you use the Flat Rate Scheme for accounting for VAT and are looking to purchase some new assets then we would recommend that you take the time to shop around to see if you can get the items you require from the same store and include them all as one purchase. This could save you a large amount of input VAT you would otherwise not be able to reclaim from HMRC.

If you require any further information on this please contact us.