Claiming back pre-registration VAT
The good news is you can reclaim VAT added to certain expenditure that was paid out prior to your business registration for VAT. HMRC’s instructions on this issue confirm:
There is a time limit for backdating claims for VAT paid before registration. From your date of registration, the time limit is: 4 years for goods you still have, or that were used to make other goods you still have, and 6 months for services. It may also be possible to improve matters by backdating registration in some cases – although you would need to take into account potential output tax liability on sales not previously liable to VAT.
You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply.
You should reclaim them on your first VAT Return (add them to your Box 4 figure) and keep records including: invoices and receipts, a description and purchase dates and information about how they relate to your business now.
You can’t reclaim VAT for:
- anything that’s only for private use
- goods and services your business uses to make VAT-exempt supplies
- business entertainment costs
- anything you’ve bought from other EU countries (you may be able to reclaim VAT charged under the electronic cross-border refund system)
- goods sold to you under one of the VAT second-hand margin schemes
You will need to reduce your claim if goods or services have a mix of business and private use. There are also special rules for reclaiming VAT on single pieces of computer equipment, aircraft, ships and boats costing more than £50,000; or land and buildings costing £250,000 or more (before VAT).
Latest News
- Small companies required to file profit and loss when new Bill becomes law - September 26, 2023
- Companies House fees expected to rise to fund new powers - September 21, 2023
- Retirees set for second bumper State Pension hike as pay inflation soars - September 19, 2023
- Clampdown on hidden online fees to help shoppers cut costs - September 14, 2023
- One in five strips back pension contributions or halts them altogether - September 12, 2023
- Trying to track down a pension? Help is at hand - September 7, 2023
- Tax Diary September/October 2023 - September 5, 2023
- Class 2 and 4 NIC for the self-employed - September 5, 2023