The Mudcat Café TM
Thread #163957   Message #3917711
Posted By: treewind
16-Apr-18 - 04:33 PM
Thread Name: Tech: Claiming VAT for studio purchases?
Subject: RE: Tech: Claiming VAT for studio purchases?
In theory if your business makes a loss you can end the year claiming back more VAT than you paid.
In practice, that's likely to result in the unwelcome attention of a VAT inspector and that will not be any fun at all, especially if it looks like you aren't really running a business. At best he might cancel your VAT registration and make you pay back what you claimed, and at worst you might get fined or prosecuted for fraud.

If you are running a business, an accountant would usually advise against registering for VAT unless you have to. An exception might be where all your customers are VAT registered too, as they'll want VAT invoices.

Similarly, it is possible to make a loss on a small business, like being a part time gigging folk musician, and get the loss taken off the PAYE income from your day job. I have done this, but only with the aid of an accountant to make sure all the figures were presented properly. It's quite legitimate though would also be questioned if you made a loss every year.