club racers getting VAT registered

[simon drabble]

Has any club racer explored the possibilities of setting themselves up as a limited company and getting VAT registered - Is it enough to claim the buying and selling of the race cars as turnover or would a few profitable trades have to be included?
I spoke to an accountant abt this and he said that as I dont make a profit on my cars (unneccessarily harsh to point it out!) I cannot run it as a company. He was not an expert in this field.

Given the amount of VAT i seem to pay in keeping the cars on the track each year it would be nice to get some back! (I saw a race I entered recently charged the VAT on the entry fees seperately). If you want to pm the reply feel free
thanks

[JR Ewing]

But if you pay VAT you have to charge it. Whjile you can make a gain here the hassle is not likley ot make it worth it...

Don't just think VAT though as you can quite legitimately run a trading entity, be it Ltd, partnership or sole trader and make losses to offset against other income although the revenue will look at whether it is a genuine trading entity and not just your hobby. If you have some car trades or, even better, hire drivers then you should be OK. I've done it for years and as long as you do have custom then racing is just an advertisement of your services...

[simon drabble]

could you please pm your accountant's details as he is presumably familiar with racing. I now run two cars (not just saloons!!)in endurance racing so the idea of classifying it as trading rather than hobby is starting to be more viable.
thanks for your help

[JR Ewing]

I think you need someone more local, setting up a 'new business' is easy. The revenue would only likely challenge a hobby, so make sure it is (it looks like) a genuine business with turnover, customers etc. etc.

[Piglet]

There is loads on info on the inland revenue web site about setting up a new business. Some of it is even quite helpful! Can't help you with an accountant though.

[zefarelly]

I've thought about this, would it be possible to run a racing team as a small business so you can offset the costs, just avoiding VAT would save a fortune!

could my team be registered, and buy stuff it needed, then I could personally 'hire' my car from the company to race?

the company could also own a trailer and race equpment to be hired out to potential customers. presumably to avoid too much obvious trickery you'd have to hire out to someone other than yourself occaisionally?

whether money actually changes hands is another matter !

[carrera]

I run my racing activities as a company, it has a bank acount and is VAT registered.

Incoming monies from sponsors are plus 17.5%; as the sponsors are all VAT registered they can claim the VAT back.The VAT charged on outgoings can be claimed back by the team, but, beware as entry fees, registrations, licences etc do not usually attract VAT.

If income, money from sponsors, sales, car hire etc exceeds outgoings then the balance will be liable to tax.

If you make a loss then the loss can be offset against other tax; this may be acceptable in the first year of trading as setting up costs will be incurred. After that the company should trade in profit.

You will need to show all trading "in" and "out" and fill in annual tax returns plus VAT returns. There are fines for missing deadlines.

Still want to set up a company?

Then check the phone book for your local Inland Revenue and Customs & Excise offices and arrange a meeting, they are all nice people.