Value Added Tax

Input tax ― pre-registration, pre-incorporation and post-registration

Produced by Tolley
  • 20 Apr 2022 12:26

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Input tax ― pre-registration, pre-incorporation and post-registration
  • Recovery of VAT incurred prior to registration
  • VAT incurred on goods purchased prior to registration
  • VAT incurred on services purchased prior to registration
  • Partial exemption, non-business activities and pre-registration input tax
  • Pre-registration input tax when re-registering for VAT
  • How to claim pre-registration input tax
  • Special records to be kept in support of pre-registration input tax claim
  • Recovery of VAT incurred prior to incorporation
  • Recovery of VAT after cancelling a registration
  • More...

Input tax ― pre-registration, pre-incorporation and post-registration

This guidance note looks at the special rules for recovering input tax:

  1. incurred prior to VAT registration

  2. incurred prior to incorporation

  3. after a VAT registration has been cancelled

For an overview of input tax more broadly, see the Input tax ― overview guidance note.

For in-depth commentary on the legislation and case law in this area, see De Voil Indirect Tax Service V3.431–V3.432.

Recovery of VAT incurred prior to registration

Normally, the right to recover input tax is contingent on a business being registered for VAT at the time at which a supply is received (ie the business must be a ‘taxable person’). However, special pre-registration input tax rules mean that (subject to certain conditions being met) a business can recover VAT incurred prior to its effective date of registration.

Different conditions apply to goods and services and special record-keeping requirements apply.

VAT incurred on goods purchased prior to registration

VAT can be recovered on goods supplied for business purposes before the effective date of registration provided:

  1. the goods were supplied no more than four years before the effective date of VAT registration

  2. the goods have not been supplied or consumed by the business before the effective date of registration

  3. the goods do not come within the scope of the capital goods scheme (CGS)

  4. the goods are to be used for taxable business purposes (if they will be used for a mixture of taxable and exempt / non-business purposes then an apportionment is required)

SI 1995/2518, reg 111(1)(a), (2)(a),

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