RCB/16/16 Treatment of VAT incurred on assets that are used by the business prior to VAT registration
Revenue & Customs Brief, Issue 16. 4 November 2016
Purpose of this brief
This brief sets out HM Revenue and Customs (HMRC) policy on deduction of VAT relating to assets used by the business prior to its VAT registration. It clarifies when, and to what extent, VAT is deductible and what to do if the correct treatment has not been applied.
Readership
This revenue and customs brief is aimed at all businesses and professional tax advisors.
Background
UK law allows a business registering for VAT to recover tax they have incurred on goods and services before their effective date of registration (EDR). This allows the recovery of VAT against goods and services as long as they're used by the taxable person to make taxable supplies once registered.
Services must have been received less than six months before the EDR for VAT to be deductible. This time limit simplifies the rules and means you don't need detailed calculations