Claiming VAT on pre-registration costs

Value Added Tax

Input VAT

HMRC have backed down on their (unannounced) apparent policy change for recovering pre-registration input tax. HMRC had been issuing letters threatening assessments where assets had been on hand prior to the date of VAT registration for a reduction in the input tax to reflect that use. Indeed some assessments had been issued!

There has been no change in the legislation and the Revenue and Customs Brief confirms that businesses are entitled to recover VAT as input tax on the first VAT return after registration on:

  • Services received within 6 months of the VAT registration date
  • Stock still on hand at the date of registration
  • Fixed assets purchased within 4 years of the date of registration, provided they are still in use at that time.

This is welcome news and HMRC are inviting claims where assessments have been issued.

If this affects you, please contact  Ellen Main-Jeffrey, Head of VAT Services, 01926 468707 or use our on-line contact form.

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