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Pre-VAT Expenses

Pre-VAT Expenses

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Hi

In an accoutancy firm:

Are we allowed to claim VAT for expenses such as advertisement, software, printer cartridges etc, if they were bought within 6 months prior to VAT registration?

Software & Cartridges are currently in use so would they classify as goods that are still in stock?

Thanks

Replies (8)

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By David Ex
07th Dec 2021 17:04

I think something like that but worth checking the relevant VAT notice. You’ll be well informed then if a client asks you the same question.

Thanks (1)
Replying to David Ex:
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By JenniFraser
08th Dec 2021 09:58

Yes I did read the notice but I could not find a proper answer, or maybe I could not understand properly thats why I asked here if someone has had an experience in VAT enquiry or something.

Thanks (0)
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By Paul Crowley
07th Dec 2021 17:09

Prior to registration or prior to trading?
Remember that services are different to goods

Thanks (3)
Replying to Paul Crowley:
RLI
By lionofludesch
07th Dec 2021 17:55

Paul Crowley wrote:

Prior to registration or prior to trading?
Remember that services are different to goods

Great question.

Thanks (1)
Replying to Paul Crowley:
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By JenniFraser
08th Dec 2021 09:55

Prior to registration, been trading for number of years.

Yes, I agree services are different but I could not find a proper answer in HMRC website. The only reason I said if we can assume software and cartridges as goods is because they were bought pre-vat registration but are currently in use.

Thanks (0)
Danny Kent
By Viciuno
08th Dec 2021 10:26

Have you read this notice?

https://www.gov.uk/vat-registration/purchases-made-before-registration

The VAT notice (IMHO) is pretty clear, especially for something as straight forward as an accountancy practice.

As Paul says, there is a distinction between goods and services which (I hope) you understand.

If you have a specific question though, fire away.

Thanks (2)
Replying to Viciuno:
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By Paul Crowley
08th Dec 2021 10:33

Purchases made before registration
There’s a time limit for backdating claims for VAT paid before registration. From your date of registration the time limit is:

4 years for goods you still have, or that were used to make other goods you still have
6 months for services
You can only reclaim VAT on purchases for the business now registered for VAT. They must relate to your ‘business purpose’. This means they must relate to VAT taxable goods or services that you supply.

You should reclaim them on your first VAT Return (add them to your Box 4 figure) and keep records including:

invoices and receipts
a description and purchase dates
"information about how they relate to your business now"

The bottom line in " " I consider the most challenging for services
Because it says absolutely nothing helpful

Thanks (1)
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By Paul Crowley
08th Dec 2021 10:30

Goods need to be on hand, so still exist at at date of registration. Dead easy.

Services, have they been consumed?
A bit challenging, but consider if there is a direct link between the services received and after VAT registration sales
Software, probably
Avertising, possibly
Telephone calls, unlikely but who knows

Thanks (1)
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