How to: Reclaim VAT you incurred before you become VAT Registered

Written by Director, Huw Moseley:
If you’ve reached the VAT threshold (congratulations!) and need to register your business, it’s worth considering reclaiming any VAT that you have incurred on:

  • Goods acquired in the last 4 years that are still owned at the date of registration
  • Services supplied for the purpose of the business in the 6 months prior to registration.

You can recover input tax on these items on your very first VAT return once you become registered.
Previously, reclaiming VAT was a bit of a headache as HMRC stated you should apportion the amount of input tax claimed to reflect the use of the asset prior to the date of registration.
Thankfully, HMRC recently published clarification on this point so that: businesses that own the asset at the time of registration can recover all the VAT incurred on the asset, where it is used for taxable business purposes.
This means there’s no need to apportion VAT to reflect use made of the asset before the date of business’ registration.
So if for example a new employee joins your team and brings their own device to work for work purposes – and you decide to reimburse them for their expense – you can then reclaim input tax on the device.
If in doubt – before you submit your first VAT return, it’s worth checking it out as input tax can quickly rack up (even if you think of a few essentials like a mobile phone/laptop, a printer, contracts, broadband etc).
Here at Link Accounting, we want you to pay the lowest amount of tax legally possible. So if you’d like help reclaiming input tax when it comes to submitting your VAT return – we’d be delighted to assist in calculating all that you can claim! Simply get in touch…


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Huw Moseley