Claiming back your VAT pre-registration expenditure

Registering for VAT? Have you claimed back your pre-registration expenditure?

Is your business thinking of registering for VAT? Or is your firm’s turnover reaching one of the mandatory VAT registration thresholds?

If this is the case, then you’ll want to know what pre-registration VAT expenditure you can claim back from the taxman.

In a nutshell, you can recover VAT on goods acquired and services received up to six months before your effective date of registration (EDR).

However, HMRC has recently released the following clarifications:-

  • VAT on services received within 6 months of EDR and used in the business at EDR is recoverable in full
  • VAT on stock is deductible to the extent that the goods are still on hand at EDR (apportionment may be required)
  • VAT on assets purchased within 4 years of EDR is recoverable in full, providing the assets are still in use by the business at EDR.

Full recovery only applies if your business is fully taxable. If it’s partly exempt, has non-business activities, or needs to restrict VAT deduction for any other reason, you’ll need to take that into account when calculating your deductible VAT. We can help you do this.

Most importantly, if you have only partially recovered VAT on assets owned prior to registration you may be able to recover the balance of VAT paid. If you think this may apply to you, talk to us today and we’ll help you recover everything the taxman owes you.

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