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I’ve only just registered for VAT, can I claim back old VAT?

8 January 2013 No Comment

I’ve only just registered for VAT, can I claim back old VAT?

The short answer is “it depends”.

Have you read the general rules in the pre trade expenses article already? Do that first, then continue with this article.

Yes, you can claim for the VAT on goods (and in limited circumstances on services too) provided they:

  • were purchased within the three years preceding the date of your VAT registration
  • are still in the possession of the business on the date of your VAT registration
  • are actually used in the course of the business; and
  • satisfy the business prime motive test

Note that three years preceding the date of your VAT registration is only the same as three years preceding the date of the business if you were VAT registered from day one. There’s a subtle difference for businesses which waited a few months or years before registering!

pretrade

Click here to see the full size chart

You should have an original VAT receipt if possible, or at least (a) some evidence (bank statement or credit card statement) showing the purchase date and the purchase price, and (b) some degree of conviction that the original purchase price included UK VAT, in order to (c) support the amount of VAT being reclaimed. HMRC can disallow any claim where the supporting records are deemed insufficient.

Given the restrictions of this rule, and for the benefit of anybody who is going to start a business and is going to VAT register, then do the VAT registration first before incurring big costs on “services” like web developers or designers. That’s often the only way you can reclaim the VAT on those services!

If you need to do a claim for pre trade VAT head back now to the pre trade expenses article.

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