Pearson Thomas - Accounting Solutions > News > Claiming Back VAT: Past, Present, and Future

There are legitimate business expenses for which you can claim back VAT, including some that were paid prior to VAT business registration. In some cases, you have several years to make claims, in other cases only a matter of months. The sooner you find a knowledgeable accountant in London the better.

According to HMRC, after a company’s date of registration claims can be backdated up to four years for goods still in your possession (or that were used in making goods still in your possession). But for services the time limit is only six months. There are also ways to subsequently backdate the registration date of your business — though the impact of other tax liabilities will have to be considered.

These kinds of backdated claims should be included on the first VAT Return filed. Records for all declarations should be retained and be easily accessible, including invoices, receipts, purchase dates, descriptions, and an explanation of the ways the purchase relates to your business.

Claims filed by your business must be for the one registered for VAT, not prior incarnations of the business or other establishments. They must be related to the goods or services your business supplies to the market.

Items that cannot be reclaimed include any purchases for private use, the creation of VAT-exempt supplies, entertainment expenditures (even if business related), purchases from EU nations (though claims may be possible using the electronic cross-border refund system), and items purchased under a VAT second-hand margin scheme.

Some items that are used for both business and personal purposes can be claimed for the business percentage of use. Also be aware that certain items — computer equipment, aircraft, ships — that were purchased for more than £50,000 fall under special rules. This is also true of land and buildings that were purchased for more than £250,000 (excluding VAT).

Claiming back VAT is a complex area of taxation. A professional accountant can guide you through the process.

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