How to claim VAT on pre-registration expenses

3 months, 1 week ago by Oliver Atkinson

VAT is an integral part of the tax system, and businesses can often recover the VAT they incur on their expenses. One of the key aspects of VAT reclamation for businesses is the ability to claim VAT on pre-registration expenses. Pre-registration expenses are the costs incurred by businesses before they officially register for VAT. Businesses are required to register for VAT when their taxable turnover for the last 12 months exceeds £85,000, or when their turnover expects to exceed £85,000 in the next 30 days. But you may also voluntarily register for VAT, if your taxable turnover is below £85,000.

Steps to Claim VAT on Pre-Registration Expenses:

1. Register for VAT: Before you can claim VAT on pre-registration expenses, you need to register for VAT.

2. Collect Supporting Documentation: To support your VAT reclamation, ensure you have complete and accurate documentation for the pre-registration expenses. This documentation includes invoices, receipts, and any other evidence of VAT paid.

3. Determine Eligible Expenses: Not all expenses incurred during the pre-registration period are eligible for VAT reclamation. To be eligible, expenses must have a direct connection to your business activities and should be eligible for VAT recovery under the standard VAT rules. Common examples of eligible expenses include purchases of goods and services for business purposes, such as office supplies, equipment, and professional services. Please note, HMRC have set a time limit on how far back prior to VAT registration you can reclaim the VAT on expenses, for services this is up to 6 months, and for goods, this is up to 4 years prior to registration.

4. Calculate the VAT and submit the VAT return: Calculate the total amount of VAT paid on eligible pre-registration expenses. Report the eligible VAT incurred during the pre-registration period on your first VAT return after registration. Submit your VAT return to HMRC along with any payments due. Ensure that you complete the form accurately and on time to avoid any penalties or complications. Once submitted and approved, you may even receive a VAT refund from HMRC!

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