Discussion
i'm sure i've seen the answer to this on PH before, but I can't find it in the archives. When you register for VAT, how long in th eoast can you claim back input VAT? I think I read it was 3 years for capital purchases and 6 months for expenses. Is this correct? and sorry if i'm getting the terminology wrong
I didn't think that there were any time limits - as long as the item on which you were claiming back the Input VAT was still in stock waiting to be resold or an asset still in use in the business at the date of VAT registration.
Obviously, items bought and used up, sold or otherwise disposed of before registration cannot be included in any pre-VAT registration Input VAT claim.
Obviously, items bought and used up, sold or otherwise disposed of before registration cannot be included in any pre-VAT registration Input VAT claim.
No think it is 3 years for goods and 6 months for services:
[quote=HM Revenue & Customs Website]
What you can reclaim from the period prior to VAT registration
If you’ve kept hold of evidence such as a VAT invoice, you can generally reclaim VAT on taxable goods and services paid for before you registered for VAT. However, certain conditions must be met.
For goods that you purchased prior to registration:
* they must have been supplied to you and your business
* they must have been supplied no more than 3 years before registration
* you must still possess them
* you must have records showing the quantity and date you obtained them
For services that you purchased prior to registration:
* they must have been supplied to you and your business
* they must have been supplied no more than 6 months before registration
* they can’t have been related to goods which you disposed of before registration
* you must have records of the services, showing a description and date[/quote]
>> Edited by touchingcloth on Thursday 5th January 18:56
[quote=HM Revenue & Customs Website]
What you can reclaim from the period prior to VAT registration
If you’ve kept hold of evidence such as a VAT invoice, you can generally reclaim VAT on taxable goods and services paid for before you registered for VAT. However, certain conditions must be met.
For goods that you purchased prior to registration:
* they must have been supplied to you and your business
* they must have been supplied no more than 3 years before registration
* you must still possess them
* you must have records showing the quantity and date you obtained them
For services that you purchased prior to registration:
* they must have been supplied to you and your business
* they must have been supplied no more than 6 months before registration
* they can’t have been related to goods which you disposed of before registration
* you must have records of the services, showing a description and date[/quote]
>> Edited by touchingcloth on Thursday 5th January 18:56
Isn't the key bit here " they must have been supplied to you and your business " - not suggesting this is the case with David but I'm sure other people have asked the question thinking you can move stuff previously purchased as an individual into the business accounts after registration and then claim the VAT back. If the goods have not been supplied to the business in the first place surely the purchase point would become the date at which they are sold to the business by the individual. This price can't be at an unrealistic value. Am I right?
It can be a moot point. However, for all sorts of legitimate reasons a business can trade for many years without registering for VAT. That is not an unusual situation.
However, not only can VAT be claimed on goods bought prior to VAT registration, but VAT can also be claimed back on goods bought prior to tarding - provided those time limits are adhered to and you have the original vouchers, invoices etc and you can prove, if asked, that the goods are being used in the business post VAT registration.
However, not only can VAT be claimed on goods bought prior to VAT registration, but VAT can also be claimed back on goods bought prior to tarding - provided those time limits are adhered to and you have the original vouchers, invoices etc and you can prove, if asked, that the goods are being used in the business post VAT registration.
Eric Mc said:
However, not only can VAT be claimed on goods bought prior to VAT registration, but VAT can also be claimed back on goods bought prior to trading - provided those time limits are adhered to and you have the original vouchers, invoices etc and you can prove, if asked, that the goods are being used in the business post VAT registration.
do you know where I can find this bit of law in writing? we have a piece of equipment bought 2.5 years before we got vat registered, and before we were incorporated. our accountant doesnt think we can claim back the vat on it...
Eric Mc said:
Try doing a google on "Pre-Trading or Pre-Registration Input VAT Claims - UK " and see what turns up.
Edited to add:
It's all contained in VAT Regulation 111 - Statutory Instrument (SI) 1995/2518.
>> Edited by Eric Mc on Wednesday 1st February 17:32
thanks for that, I emailed my accountant with some references that i thought proved what I was talking about, but he replied with this
accountant said:
Although Pete has been paid via his loan account, effectively the company purchased the lens from Pete. However, as Pete is not VAT registered nor did he charge VAT on the sale of the lens to the company, the input VAT cannot be claimed.
The three year rule only works if the company had purchased the Lens before it was VAT registered, which is not the case here.
i'm pretty sure he is wrong, but I couldn't find the specific Regulation 111 that you mentioned. So who is right - me(you!) or him???
You cannot claim Input VAT on a purchase which did not contain any VAT on it.
The company bought the item from Pete (not from the original VAT registered supplier). Pete was not a VAT registered trader so, when he "sold" the item to the company, he would not have charged any VAT.
If the company had purchased the item directly from the original VAT registered supplier and then later became VAT registered itself, then it WOULD be able to recover the Input VAT on the original purchase.
Your accountant is spot on. The reason why you cannot claim back the VAT on that particular cost is nothing to do with the time gap between the date the item was puchased and the date the business eventually registered for VAT. It is to do with the fact that VAT was not charged on the transaction in the first place.
>> Edited by Eric Mc on Wednesday 1st February 19:08
>> Edited by Eric Mc on Wednesday 1st February 19:08
The company bought the item from Pete (not from the original VAT registered supplier). Pete was not a VAT registered trader so, when he "sold" the item to the company, he would not have charged any VAT.
If the company had purchased the item directly from the original VAT registered supplier and then later became VAT registered itself, then it WOULD be able to recover the Input VAT on the original purchase.
Your accountant is spot on. The reason why you cannot claim back the VAT on that particular cost is nothing to do with the time gap between the date the item was puchased and the date the business eventually registered for VAT. It is to do with the fact that VAT was not charged on the transaction in the first place.
>> Edited by Eric Mc on Wednesday 1st February 19:08
>> Edited by Eric Mc on Wednesday 1st February 19:08
no, VAT was charged on it in the first place. it was a lens bought from a camera shop by a non VAT registered sole-trading indivdual, so he paid the VAT on it. He then later changed from being a sole trader to being incorporated, and from there to being VAT registered. At this point he wants to claim back the VAT he paid on the lens originally. Does that change things?
>> Edited by dcw@pr on Wednesday 1st February 19:11
>> Edited by dcw@pr on Wednesday 1st February 19:11
You are getting confused with the legal status of the individual and his ltd company. They are two totally separate and distinct legal entities. If HE HIMSELF as an individual sole trader had registered for VAT, then HE PERSONALLY could have claimed back the VAT after he had registered. However, he never did register for VAT as a sole-trader..
What happened was that he formed a ltd co and the ltd co. registered for VAT. HE PERSONALLY (a non VAT registered individual) sold the item to the company. He didn't charge VAT (as he couldn't) therefore the company can't claim any VAT back.
What happened was that he formed a ltd co and the ltd co. registered for VAT. HE PERSONALLY (a non VAT registered individual) sold the item to the company. He didn't charge VAT (as he couldn't) therefore the company can't claim any VAT back.
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