My turnover is well below the current VAT threshold , if I cancel my VAT registration, will i have to pay back the VAT I have already claimed?
This article is continued from the first part, found here.
...You don't need to worry about intangible assets like patents, copyright and goodwill. If you obtained goods free of VAT as assets of a business transferred to you as a going concern from a taxable person, then you must include them in your VAT calculations.
If you obtained land or buildings as assets of a business transferred to you as a going concern, then you must account for VAT on them if you have 'opted to tax'.
You should exclude items on which you couldn't reclaim VAT when you bought them. These may be such as goods bought from unregistered businesses or cars, except private taxis, self-drive hire cars and driving school cars on which input tax has been claimed Items under the Capital Goods Scheme.
If you have goods onhand when a registration is cancelled, HMRC usually considers this to count as a supply. So if you own any capital items when you cancel your registration you may be required to make a final adjustment in respect of any items still within the adjustment period. This adjustment should be made on your final return.
The CGS applies to capital expenditure on land and buildings with a value of £250,000 or more (exclusive of VAT) which was subject to VAT at the standard or reduced rate. If you are in any doubt about whether or not you have to make an adjustment, you should contact HMRC.
How to work out the VAT due
You can work out the VAT you owe by valuing the relevant land or goods at the price you would expect to pay for them in their present condition. If you cannot work this out, then you should use the price you would expect to pay for identical or similar land or goods. If you can't work this out, then you should use the price the goods would cost to produce at the time you cancelled your registration.
If the total VAT on the relevant assets is £1,000 or less, you don't need to pay any VAT. So if the relevant assets are all standard-rated, you don't have to account for VAT if their total value, including VAT, is £6,000 or less. If they're worth more than this, then you must account for VAT on all the goods you have on-hand on your final VAT return. Make sure that you don't under declare the VAT due on your final VAT Return, as this could lead to a fine. There are special provisions for businesses which are partly exempt or use the Cash or Annual Accounting Schemes.
See also: Catering and VAT