Claiming VAT incurred before VAT registration. This question pops up time and again. The answer is yes as explained below:
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Recovery of VAT paid before registration
You can recover the VAT paid before VAT registration. But you must be able to present acceptable evidence (see See here).
Furthermore, you must be able to meet the conditions as set out below.
Conditions for recovering VAT incurred on goods before you registered
The conditions are:
- you supplied the goods not more than 4 years before the business was registered or was required to be registered
- the goods were supplied to the person who is now registered for VAT
- Obtained goods for the business which is now covered by the VAT registration and related to its taxable activities – if the services related partly to taxable activities and partly to other activities, you must work out what proportion of the use of the services related to the taxable activities
- goods are still with you or they have been used to make other goods which you still hold
- a stock account of the goods is maintained – this must show the quantities of goods and the dates when you obtained them, and if you used any goods to make other goods, or disposed of them after you were registered for VAT, the account must give details, with dates
VAT incurred on goods which have been completely used up before registration can’t be claimed.
But, you must reduce the VAT you deduct on stock for resale to account for any stock that is sold before you’re registered.
If the person who is now registered is a corporate body, you may still be able to reclaim VAT from before it was incorporated.
Ensure You keep a record of all taxable supplies that you receive for your business. This includes any zero-rated supplies you have received.
You must keep this record in such a way that the details of each transaction and the amount of VAT are entered in full or can be easily found by referring to the:
Imported goods and goods removed from warehouse
You or your agent should make sure that official evidence is obtained, where required, of VAT chargeable on imported goods and goods removed from warehouse. See Imports (VAT Notice 702).
This evidence serves the same purpose as a VAT invoice from a registered UK supplier. Without it you may not be able to reclaim tax you have been charged.
The evidence should be annexed or cross-referenced to the relevant invoice from your supplier and both should be retained. For goods acquired from a VAT-registered person in an EU member state, you should hold the relevant invoice from the person supplying the goods.
Services received from abroad
Your should keep the invoices for the services received in the UK but provider by a supplier abroad.
This post does not cover all the situations.
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