11 Nov

Claiming VAT Back on Pre-Trade Expenditure

Claiming VAT Back on Pre-Trade Expenditure

You can claim VAT back on certain pre-VAT registration expenditure. The time limit for backdating claims is 4 years for goods you still have at the date of VAT registration and 6 months for services.

You can only reclaim VAT on purchases for the business now registered for VAT, they must relate to your “business purpose”.

VAT should be reclaimed on your first VAT return and you must keep a record of the invoice and receipt, a description of what it is and how it relates to your business.

You can’t reclaim VAT on the following:

  • Purchases for personal use
  • Business entertaining costs
  • Business entertaining costs
  • Goods and services your business uses to make VAT-exempt supplies
  • Anything from other EU countries
  • Goods sold to you under a VAT second-hand margin scheme

You will need to reduce your claim if goods have a mix of personal and business use. Special rules apply when 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.

If you are on the flat rate scheme you won’t be claiming VAT back but special rules apply for certain capital assets which cost more than £2000.


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