Pre-registration expenses for VAT are a specific set of expenses you can claim within a certain time period of registering your business. There is some scope to reclaim VAT on goods and services your business bought before registering for VAT. You will only be able to do this if you have the VAT invoices for such purchases. This reclaim is often a valuable means of funds in the earlier periods of trade so it is definitely worth looking into. Your accountant should be able to provide you with the relevant information or contact WardWilliams Creative for a range of accountancy services for creatives – including VAT advice.
Generally speaking, you can claim VAT on goods you bought up to 4 years prior to the date of registration, and services you bought up to 6 months prior to the date of registration. However, there are a set of conditions that need to be met:
- The goods/ services were bought by you as the entity/ company that is now registered for VAT.
- The goods/ services are for your VAT taxable business purpose only.
- The goods are still held by you or they have been used to make other goods you still hold.
You cannot claim if the goods and services fall within these categories:
- Goods that’s has been completely used up e.g. Petrol, Gas, Electricity etc.
- Goods that have already been sold or supplied before registering for VAT.
- Goods relating to supplies that are exempt from VAT.
In order to claim pre-registration VAT on goods and services you must have valid VAT invoices for each item that you are claiming for. The pre-registration expenses should be reclaimed on your first VAT return.