Pre-registration Input Tax

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Doing the first VAT Return for a Client? Yes! Then make sure you claim pre-registration input tax.

This is a statutory right, under VAT Regulation 111, and you can find out more in VAT Notice 700, chapter 11.

The claim for pre-registration input tax can include services purchased up to 6 months before registration, and goods purchased up to 4 years before registration, as long as those goods are on hand at the date of registration. Do prepare a simple schedule of the goods.
And make sure you have proper VAT invoices.

You should claim for this input tax on the first VAT Return. And do expect HMRC to query it. Typically you will have to provide a schedule of the input tax and copies of the 5 or 10 largest value purchase invoices. (If HMRC delay repayment do apply for a Repayment Supplement.)

If the client has changed legal entity before registration for VAT, for example, a sole trader becomes incorporated, then input tax incurred before the change cannot be claimed. This typically creates a problem where the sole trader buys a commercial vehicle, as the VAT will be lost.

You can claim pre-registration input tax even if the Client will be using the Flat Rate Scheme (FRS).  Check out Notice 733, para 7.6.

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Les Howard
Les is a partner in vatadvice.org a specialist VAT practice based in Cambridgeshire. He has over 30 years’ experience in VAT, including a short spell with HMCE (as it then was). As well as assisting businesses and charities with VAT issues, he lectures on VAT, and sits on the Tax Tribunal.