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Pre-Registration VAT
Pre-Registration VAT

A discussion about Pre-Registration VAT, the rules surrounding it, and how to claim it with Ember.

Erin Cassells avatar
Written by Erin Cassells
Updated over a week ago

What is Pre-Registration VAT?

Pre-registration VAT refers to VAT on purchases before the VAT registration date. Pre-registration VAT rules allow businesses to recover the VAT paid on purchases before the VAT registration date once they become registered. This important provision helps businesses avoid losing out on VAT recovery.

VAT can be claimed on certain expenses up to 6 months prior and assets up to 4 years before the VAT registration date.

Conditions for VAT Recovery

To benefit from pre-registration VAT recovery, the business's goods and services before VAT registration must meet certain conditions.

  • Goods or services purchased must be used for the business's taxable activities.

  • Secondly, the goods or services must have been purchased within a specified period before the VAT registration date.

    • Goods up to 4 years: Goods are classed as either stock held for resale or fixed assets and must be owned by the business at the date of VAT registration. VAT can be claimed on goods that satisfy this requirement which were bought within 4 years before the registration date.

    • There is a requirement that stock must be held at the date of VAT registration to reclaim the VAT on this.

    • Services up to 6 months: VAT on expenses can be claimed up to 6 months before the VAT registration date.

Invoices and Evidence

To claim back the VAT on pre-registration goods and services, you must provide proof of the cost and date of purchase. This evidence will likely be in the form of a VAT receipt, which will show the date, purchase price, and VAT charged on the expense.

Records should be held for proof of the cost and date of purchase of all goods and services on which VAT can be claimed, as these may be requested in the event of a VAT check by HMRC.

Pre-incorporation Expenses

Goods or services purchased before the company’s incorporation date are allowable expenses for accounts. Assuming these expenses have been paid for, they can be added to Ember via the ‘expenses’ tab, with the date entered being the company’s incorporation date.

VAT can be claimed on those goods and services if, at the time of purchase, they were used or were to be used to make taxable supplies.

The six-month limit for services and the four-year limit for goods also apply to pre-incorporation claims.

Flat rate scheme

On the Flat Rate Scheme, VAT is generally not recoverable. However, a Flat Rate Scheme user can claim VAT on pre-registration expenses on their first return, subject to the rules above.

How to Claim with Ember

If you’re ready to submit your first VAT return and are looking to claim VAT on pre-registration or pre-incorporation expenses then get in touch with us via the chat using the wording ‘submit first VAT return’.

One of our accountants will then contact you to support you with making the required adjustments to the VAT return.

Once the pre-registration VAT has been added to your first VAT return, we will let you know the return is ready to be submitted to HMRC, and you can check and submit this. If you need some directions on how to do this, please refer to this article here which will walk you through the process.

If you have any questions or concerns about anything in this article, please get in touch with our support team, and we’ll get back to you on those.

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