Menu visibility control

Video

Events

Startup Surgery

Most Recent

News

Iris Capital launches €250m European tech investment fund

News

Startup Weekly: Welsh tech accelerator calls for applications, Virgin StartUp partners with WeWork and more

Tech City Voices

Culture. There’s no app for that, Kalanick

Press Releases

‘Connected finance’ app Curve hits £50m spend ahead of UK launch
“Coffee, networking and productivity”: Workspace disruptor ‘Lounge’ launches in London
Kompli-Global’s Technology Will Make Life Harder for Money Launderers

Doctor, doctor, I’ve just registered for VAT, can I reclaim VAT I incurred before I registered?

accountant

Dear Doctor, I have just registered for VAT but can I reclaim VAT I incurred before I became registered?

Michael O'Brien says...

twitterlinkedinFacebookgoogle_plustwitterlinkedinFacebookgoogle_plus

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).

Enter your email address to receive updates straight to your inbox

* indicates required
Send me news on...
twitterlinkedinFacebookgoogle_plustwitterlinkedinFacebookgoogle_plus

Editor's picks

Paris

Iris Capital launches €250m European tech investment fund
posted 10 hours ago

Startup Weekly: Welsh tech accelerator calls for applications, Virgin StartUp partners with WeWork and more
posted 13 hours ago

Culture. There’s no app for that, Kalanick
posted 15 hours ago

startup life

Uber’s CEO resigns, over £368m in UK tech funding, a new $3.3bn fund and more in The Week in Tech
posted 18 hours ago

inploi-co-founders

EXCLUSIVE: London-based Inploi raises £500,000, brings total to £1m
posted on June 22, 2017

Peter-Smith-Nic-Cary-Feb-2016

UK-founded tech startup Blockchain secures $40m Series B
posted on June 22, 2017