Limited company self install VAT

[Whodat]

Hi, this may be a stupid question but here goes. I am unemployed, handy and f-gas qualified. If I...

 

1) register a limited company whose purpose is insulation and retrofit of insulation and heat pump solutions.

 

2) have my own home as my case study installing insulation (e.g. underfloor, loft) and a2a heat pumps.

 

3) register for VAT, charging my wife 0 VAT for supply and install, reclaiming VAT for the materials and equipment used.

 

4) unsuccessfully market my business, decide to close it as it isn't viable and go back to a desk job.

 

Has anything wrong occurred (legally or civilly speaking)?

Edited 12 hours ago by Whodat

[JohnMo]

Are A2A vat except?

 

Once registered everything the company does is subject to VAT. You have to manditory vat returns.

PAYE returns, P11D etc.  Limited company needs to do annual returns, generally they can be self completed - but it generally rises a flag for audit. Any profits are subject to taxes etc. plus when you fold the company you have to do final return.

 

Any directors have to do self assessment also.

 

Is it really worth the hassle to save a few pounds?

 

I ran various limited companies (contracting and consulting), now just pay all the tax, as it's too much like hard work.

[andyscotland]

The big challenge would likely be demonstrating that the VAT reclaim on the materials was genuinely for the purpose of trade.

 

That would imply that you would need an arms length transaction on commercial terms for the installation. The claim that it was a show home / marketing expenditure would be very hard to evidence if you did not subsequently end up making any sales to anyone else. You might be able to argue that a discounted rate was justified, but that would almost certainly need to include at least some labour costs as well as cost of raw materials. You then have the challenge that the labour fees are in the company and can't get out of there without being taxed on some level.

3 hours ago, Whodat said:

Has anything wrong occurred (legally or civilly speaking)?

 

Is probably the wrong question, because the boot is largely on HMRC's foot. With most tax things, it's usually on you to prove you've done things right rather than on them to prove you haven't.

 

The right question is therefore likely "If HMRC query my VAT reclaim, can I produce strong enough evidence to convince them I am genuinely intending to trade, and how much time / professional advice might I require to win that argument?".

 

If HMRC think it "smells a bit off" then the likely outcome is they raise an assessment and challenge you to appeal that at Tribunal if you think they're wrong. It's very unlikely to be cost effective to go down that route.