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You can reclaim the VAT that you pay when you buy goods or services for your business. This VAT is called input tax by HM Revenue & Customs (HMRC). |
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You can reclaim input tax on your purchases regardless of whether the goods or services your business sells are standard, reduced or zero-rated for VAT. |
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You will need all of the required documentation, such as VAT receipts, to be able to reclaim the input tax that you have paid. |
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You cannot reclaim VAT on goods and services that are used for non-business activities. |
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Generally, you cannot reclaim VAT paid on any items related to goods or services you sell that are exempt from VAT, although there are exceptions. |
When you can reclaim VAT
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Generally, |
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You can reclaim VAT that you pay when you buy goods or services for your business. This VAT is called input tax by HMRC. You can reclaim VAT on your purchases regardless of whether the goods or services your business sells are standard, reduced or zero-rated for VAT. |
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You will need to keep all of the required records, such as VAT receipts, to be able to reclaim VAT. |
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VAT rules in relation to business expenses sometimes differ from income tax rules in relation to business expenses. Therefore you should not assume that you can reclaim VAT on an item just because it is an allowable expense for Income Tax or Corporation Tax purposes. |
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Reclaiming VAT on items bought before being registered for VAT
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You may be able to reclaim the VAT that you have paid on goods or services that you have bought prior to your VAT registration. |
When you cannot reclaim VAT
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There are a number of situations where you cannot reclaim VAT that you have paid. |
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You cannot reclaim VAT paid for goods and services that are used for non-business activities. This includes: |
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goods and services that are bought for your personal use |
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cars that are not used exclusively for business purposes (and any fitted accessories and delivery) |
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goods and services for non-business use bought by charities or not-for-profit organisations |
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You also cannot reclaim VAT on the following business expenses. |
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Generally, you cannot reclaim VAT paid on any items related to goods or services you sell that are exempt from VAT, although there are exceptions. |
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You cannot reclaim VAT when you pay for goods or services to be supplied direct to your customer. However, in this situation the VAT may be claimable by your customer if they are VAT registered. |
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VAT cannot be reclaimed when you buy items such as second-hand goods, art, collectibles and antiques. However, in this situation, the margin schemes for VAT apply. |
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You cannot reclaim VAT on items that you have bought from suppliers in other European Union (EU) states. You may be able to claim the VAT back from the relevant VAT body in those states. |
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You cannot reclaim VAT on assets of a business that are transferred to you as a going concern. |
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What is 'business' and what is 'non-business'?
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You can only reclaim VAT on goods and services you buy for your business. |
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You are in business if you supply goods or services in exchange for payment, and this is a frequent occurrence and an ongoing activity. |
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You are not in business if you occasionally receive income from sources such as leisure activities or hobbies. |
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Reclaiming VAT on goods that are used both for business and non-business
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If you use an item for both business and non-business purposes such as a computer, you can only reclaim VAT on the proportion of the item that you use for your business. |
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How we can help?
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At Accountancy Champs with our experience and knowledge, we can assist you with your VAT reclaim. Get in touch by either calling us or using the get a quote form. |
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We offer service packages such as Rebate service package (which covers VAT reclaim) to meet your budget or individual needs. |
