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Thread: Deemed VAT

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    Deemed VAT

    I have a quick question regarding deemed VAT.

    Our client is buying a website from an individual (who is not registered for VAT) as an income earning activity.

    Can we deem the purchase to be a VAT deductible expense and claim the VAT on it?

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    Diamond Member Justloadit's Avatar
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    No - only a registered VAT vendor may issue an invoice with VAT on it.

    The respective non VAT supplier will issue a invoice - there is no VAT applicable. When you enter the expense in your accounting package, it is a zero rated input entry. Make sure your accounting package is set to allow this type of invoice.
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    QRS (22-Mar-12)

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    Site Caretaker Dave A's Avatar
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    AFAIK you can only claim deemed VAT on second hand goods for resale. It doesn't sound like your situation qualifies.

    Should the VAT vendor sell the website one day, I would think you would be able to claim the deemed VAT on the original purchase price as an input VAT at that stage as you woud have to charge VAT on the selling price. But as there is no intent to resell the website at this point, I have my reservations that you could make a deemed input VAT claim at this stage.
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    QRS (22-Mar-12)

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    Thank you Dave. I agree 100%.

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