As a VAT-registered business, you can reclaim VAT on many of the goods and services you purchase. Our quick guide outlines which expenses you can claim for and what evidence you need to supply.
What is input VAT?
Input VAT is the amount of tax added to the price of goods or services purchased for your business. You’ll see this marked on invoices and receipts from VAT-registered suppliers. Most VAT-registered businesses can reclaim this tax through HMRC.
Which purchases can I reclaim input VAT on?
You can reclaim VAT if:
- your business is VAT-registered
- the goods or services have been supplied
- supply has taken place in the UK
- the supplier is VAT-registered in the UK
- supply was made to the business claiming input VAT
- you have a valid VAT invoice or receipt.
You cannot reclaim VAT if:
- the product or service is solely for private use
- you do not have a valid VAT invoice or receipt
- the supplier isn’t VAT-registered (ie. the invoice or receipt has no VAT on it)
- the product or service is exempt or restricted by legislation*
You can reclaim a portion of VAT if:
- the purchase is used both personally and for business.For example: if you use your phone for 50% home use and 50% business use, you can reclaim input VAT on 50% of all costs.
*Not all purchases qualify for input VAT reclaims. To find out which purchases are exempt or fall outside the scope of VAT, please see HMRC’s VAT rates list.
Can claims be backdated?
Yes. If your business has recently become VAT-registered, earlier purchases can be claimed for within a set time limit. From the date you first registered for VAT, claims can be backdated up to four years for goods and six months for services.
Backdated claims should be declared on your first VAT Return. You’ll need to explain how these purchases are relevant to your current business – e.g. by proving that goods are still being used or were used to make other goods the business now uses.
Providing valid VAT invoices and receipts
HMRC ask for a high standard of evidence to ensure that all claims are legitimate and accurate. You must obtain a valid paper or electronic VAT invoice or receipt for every purchase you wish to claim for.
Invoices must include:
- name and address of your business
- name and address of the supplier
- the supplier’s VAT number
- amount of VAT chargeable (in sterling)
- description of the goods or services
- total amount payable, excluding VAT
- date of the invoice
Receipts must include:
- the date
- supplier’s VAT number
- a description of the items purchased
You are expected to carry out a reasonable level of due diligence on each invoice, including checking that all information is correct.
Making a claim and getting paid
Input VAT claims are made through your VAT Return.
As a general rule, refunds are issued within 10 days. If you haven’t heard anything after 30 days, you should contact HMRC or seek advice from your accountant.
You can find more information about reclaiming input VAT on the HMRC website. As with all areas of tax, there are exceptions and grey areas – if you’re unsure, always speak to a specialist first.
For more information and advice about input VAT, please email the team at Maitland or call us on 01825 748308.