Purchases made before VAT registration
Overview 📘
When a business registers for VAT, it can reclaim VAT paid on certain goods and services purchased before registration. HMRC allows this to ensure businesses are not disadvantaged for incurring VAT costs while preparing to trade.
However, strict time limits apply depending on whether the purchase was for goods or services, and all items must be linked to your ongoing business activities.
✅ Time Limits for Reclaiming VAT
You can reclaim VAT on purchases made before registration within the following timeframes:
| Type of Purchase | Reclaim Period (before registration date) | Examples |
|---|---|---|
| Goods | Up to 4 years | Equipment, stock, or materials still in use or forming part of other goods you still hold |
| Services | Up to 6 months | Rent, software, utilities, or professional fees |
💡 The timeframes count backward from your official VAT registration date.
Example:
If your registration date is 1 April 2024, you can reclaim VAT on:
- Goods purchased after 1 April 2020 (if you still have them).
- Services purchased after 1 September 2023.
💡 Conditions for Reclaiming
To qualify for a reclaim:
- The goods or services must have been used for business purposes.
- They must relate to taxable supplies you make as part of your trade.
- You must still own or use the goods on which VAT is reclaimed.
HMRC will not allow claims for:
- Goods or services used to make VAT-exempt supplies.
- Purchases used for non-business or personal purposes.
- Items that have been completely consumed before registration (for example, petrol already used, or fully expired software subscriptions).
🔗 HMRC: Claiming VAT before registration
🧾 Making the Claim
You can only reclaim pre-registration VAT on your first VAT return.
Keep full and accurate records, including:
- Invoices and receipts showing VAT paid.
- Dates and descriptions of the purchases.
- Evidence showing how each item relates to your current business use.
💡 It’s good practice to make a separate summary list for your accountant showing each pre-registration item and the VAT amount claimed.
✅ Summary
- You can reclaim VAT on goods (4 years) and services (6 months) before your registration date.
- The items must relate to your current taxable business activities.
- Claims are made only on your first VAT return.
- Keep clear supporting documentation to justify the claim if HMRC requests it.