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VAT claim pre registration

VAT claim pre registration

Client wants to claim back VAT paid on developing music downloads prior to VAT registration.  The downloads are still available post registration and therefore the income attracts output tax but they were also available prior to registration where no VAT has been accounted for.  Can the client claim back the input tax paid on the creation costs of these downloads?

thanks for your assistance.


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30th Mar 2011 09:39

Input tax claim from before registration

There is statutory provision for you to recover input tax from before you registered. However, there are time limits, which will affect you; these differ depending on whether the costs were goods or services. VAT Notice 700, Chapter 11 provides the details here. Do check the time limits carefully, and the requirement to provide a schedule of invoices.

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By hallsi
30th Mar 2011 09:53

VAT input on stock?

thanks for your reply.  I appreciate that VAT can be claimed pre-registration.  My question specifically relates to stock.  Normally, where stock is still on hand at VAT registration date then you can reclaim input tax paid (subject to the time limits).  However, in this situation the music stock was created before VAT registration and has been available for download pre-vat registration and is still available to download post-vat registration.  can the input tax be reclaimed?

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30th Mar 2011 12:05

How much stock does he have?

You say the question is about stock, if that's the case then a stock take can decide the level of input tax allowable.

However I douby you'd be able to do this; files when purchased 1, files at registration 1, sales 100. Doing 100 sales of stock having only purchased one item?

It seems to me this is a supply of services, as such the six month rule applies, if supplied in the last six months has the service been consumed at registration? No. Just like logo design may have been used in making sales both before and after registration so is this and I'd view it as fully recoverable (if the 6 month rule is met).

If you do want an analogy for goods then a plumers tools could have been used for four years prior to registration on 500 jobs, but only lasts a couple of weeks after registration before the head falls off his hammer, that hammer is still recoverable in full.

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30th Mar 2011 16:55

Supply of Services - 6 month rule applies

I agree with spidersong; electronic files are not 'goods' as defined by the legislation. (Unless you want to try to create a legal precedent!) Where you have created or purchased an electronic file, and made that available to customers, I think that is a supply of services. That leaves you with the 6 month rule, I'm afraid.

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