Reclaiming Pre-registration VAT on Equipment

What if already claimed on previous Tax return via AiA or normal cost

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Hi All,

I have a new client who is a sole trader and recently registered for VAT, he is attempting to reclaim VAT on tools and equipment going back 4 year's as per HMRC guidence.

I'm not particularly happy with the backup which has been provided knowing it will not be satisfactory should this return be checked, so will be pushing back to him before I proceed.

However with this aside i'm unsure if the claim for this input VAT will be allowed anyway given this equipment has likely been already claimed under either AIA, capital allowances of as a straight tax deductable cost on previous tax returns, he did his own self assesments previously.

I'm struggling to find guidence from HMRC or in general on the web for this. I imagine HMRC wouldn't allow you to double claim in this way however their limited guidence on 'Purchases made before registration' does not touch upone this senario which must be quite a common occurance I imagine.

If they do allow you to still claim then an correction would be needed, correcting in the current year would not be a true correction obviously given the different tax allowance's over the previous 4 years etc.

I assume if you have claimed for these costs at the gross amount previously then you wouldn't be able to claim (unless you attempted to correct each of the previous tax returns) though I would like a definitive answer to this before I respond to my cleint.

Never come across this before, not a VAT expert so any help is greatly appreciated.

Thanks

David 

 

 

 

 

 

 

 

 

Replies (2)

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JCACE
By jcace
10th Aug 2018 10:58

If a person who has incurred qualifying expenditure receives an additional VAT rebate while owning the asset at some time in the chargeable period in which the rebate is made, the receipt of the VAT rebate is a disposal event. This means that the rebate is brought to account as a disposal value in addition to any other disposal value to be brought to account. You should take any additional VAT rebates received (both by the taxpayer and, where the asset was acquired in a connected persons transaction, by the connected persons) into account when you apply the expenditure incurred limit to disposal value. CA29230

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Replying to jcace:
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By Hickey265
10th Aug 2018 11:07

Thanks for the prompt and detailed response which makes complete sense.

I would treat as advised providing the client provides me with adequate backup to this claim.

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