Is it possible to claim vat restrospectively?

[ODearMe]

DH is self employed and has only just realised this week that is was possible for him to add vat on invoices and retain 7 per cent.

He has missed out on a lot of money over the 3 years. Is it possible to do anything about this?

Thanks v much

Anyone?

Is he VAT registered?
Not quite sure what you mean about "retain 7%"
are you meaning on a flat rate scheme ...
and no, you cannot retrospectively change your accounts at registration

DH said if you put 20 per cent on top of invoice, you pay back 13 per cent flat rate tax and keep the rest?

He has only just realised this so can he claim back the last few years?

He is going to get himself vat registered

He can't charge VAT until he is VAT registered & has a registration number.

How much is he earning? I think the current level at which you can become VAT registered is somewhere in the 80 to 90 thousands.

In answer to your question, you can claim VAT retrospectively, my dh did this last year (he became VAT registered rather later than he should have done as he wasn't really keeping an eye on what he was earning).

But most of the people who pay him are large businesses who have accounts departments who can handle making this sort of retrospective payment. I don't know if he would have attempted to claim VAT from private individuals or one-off customers.

Has he got thecwrong end of the stick? you don't keep any vat, it all goes to hmrc

Ring them up and talk about the VAT flat rate scheme. And reclaiming VAT on purchases before registration.

He would also have to pay the flat rate on his whole turnover & not be able to claim it back on purchases.

If his customers are mostly other vat registered businesses & he doesn't sell any 0 rated services or supplies then he may end up better off. If not & his customers are domestic/non registered businesses he may have to lower prices to be competitive

For example my dad runs a vat reg plumbing company.

Say he charges £90 inch vat for a boiler service & Mr non reg plumber charges £90. My dad only gets to keep the net figure

if he tenders for a contract at a school or university (institutions that can't be vat registered & so can't claim it back) they gave to set prices accordingly.

oDearMe
your DH has a rather confuddled view of VAT

you may only charge it if you are registered
compulsory once turnover goes over £77,000
voluntary below that

you may not charge it for dates that you are not registered
you do not get to keep ANY VAT : you become a tax collection agent for the government

pre registration VAT can be claimed on equipment still in posession at the date of registration : on the basis that VAT will be charged on the sales associated with it
it is not possible to reclaim VAT relating to transactions completed before the registration

and flat rate schemes : you need to check the rate applicable to your business
and bear in mind that HMRC will never ever set up a flat rate percentage that leaves them out of pocket

He's talking about the Flat Rate scheme for VAT.

He cannot set this up retrospectively.

However, a lot of people get very confused about this. You apply the flat rate to the GROSS total, not the net.

So for an invoice of £100 net, you add £20 VAT, totalling £120 gross.

You apply the fixed rate to this. So if the rate appropriate to his sector is 13%, he remits £15.60, NOT £13.

Also, the 13% is applied to his total income, including items which may otherwise not be VATable, such as rent.

Do a bit of research, and make sure you register the fixed rate scheme before applying it.

If your dh provides goods or services to mostly non business customers then he may then find that in adding 20% to his prices he becomes uncompetitive and finds it harder to get work/sell goods competing with other self-employed people who are not VAT registered.

Thank you for your replies, you have been incredibly helpful. DH has better understanding now.