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Pre-registration expenditure – can you reclaim the VAT?

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 expenditure you can claim back the VAT on.

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.

If you need help with VAT returns or VAT planning generally please get in contact.

Avatar for Mark Boulter
About Mark Boulter

Mark Boulter is responsible for the efficient running of the firm’s infrastructure, and ensuring that THP delivers the best client service. Promoting the vision and culture across all branches, people are the key: “I like people who have a fresh approach and I’m happy for them to run with their ideas,” he says.

Communication across departments is crucial and Mark pioneers this. He ensure that people and departments not only talk to each other, but that they share ideas– whether they’re about marketing, finance, sales, strategy or any other topic that can result in us offering a better service. “I think helping to develop the next generation of THP people is essential to our success,” Mark adds. “We’ve a lot of talented people and our way of doing things increasingly attracts ambitious newcomers who are looking for a fresh approach. That’s good for us and even better news for our clients.”

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