Can I Reclaim VAT?

‘Can I Reclaim VAT?’ is a question we get asked most often when a business owner is considering voluntary VAT registration.

VAT is a significant consideration for businesses in the UK, but it’s not just about paying it; you may indeed also be able to reclaim VAT on certain purchases.

In this guide, we’ll explore the conditions under which you can reclaim VAT, helping you maximise your potential VAT reclaims while staying compliant with HM Revenue & Customs (HMRC) regulations.

Can I Reclaim VAT?

VAT Registration

Before discussing VAT reclaims, it’s essential to ensure that your business is VAT-registered. If your taxable turnover exceeds the VAT registration threshold, which is £90,000 as at the date of this post, you must register for VAT. Once registered, you’ll receive a VAT registration number, enabling you to reclaim VAT on eligible purchases.

Eligible Purchases

You can typically reclaim VAT on purchases made for your business that are used for taxable supplies. This includes goods, services, and equipment purchased exclusively for business use. However, certain items may be subject to restrictions or conditions, so it’s crucial to familiarise yourself with HMRC’s guidelines.

VAT Invoices

To reclaim VAT, you must have valid VAT invoices for the purchases in question. A valid VAT invoice should include specific details, such as the supplier’s VAT number, a unique invoice number, the date of issue, a description of the goods or services supplied, the total amount excluding VAT, and the VAT amount charged.

Input VAT

The VAT you reclaim on purchases is referred to as input VAT. This is the VAT you’ve paid on your business expenses. You can typically recover this input VAT by including it on your VAT return as part of your reclaim process.

Partial Exemption

If your business makes both taxable and exempt supplies, you may be subject to partial exemption rules. This can affect your ability to reclaim VAT on purchases related to both types of supplies. It’s essential to calculate your partial exemption position accurately to determine the amount of VAT you can reclaim.

VAT Schemes

Depending on your business’s circumstances, you may be eligible to use specific VAT schemes, such as the Flat Rate Scheme or the Annual Accounting Scheme. These schemes can affect how you reclaim VAT and may simplify the process for certain businesses.

Record Keeping

Maintaining accurate records of your VAT transactions, including VAT invoices, is crucial for reclaiming VAT and complying with HMRC requirements. Keep organised records of all purchases and VAT reclaims for at least six years.

So, can I reclaim VAT?

Reclaiming VAT can provide valuable financial benefits for your business, but it’s essential to understand the conditions and requirements involved. By ensuring your purchases meet HMRC’s criteria, keeping proper records, and staying informed about VAT regulations, you can maximise your VAT reclaims while maintaining compliance with HMRC guidelines. Effective VAT management contributes to the overall financial health and success of your business.

Helping you with VAT

Or just email us if you want our:

New Business Start-up Checklist, or;
Business Plan Template, or;
Help with
- Bookkeeping
- Software
- Accounts
- Taxes

Achieving Success with your business

If you’re just starting your new business venture or struggling with the steps to the next level contact us now.

We can help you with this and much more

Get ready for success with Moore Financial Management

We can help you with all of your compliance obligations such as:

Self Assessment Tax
Making Tax Digital
Corporation Tax
Filing Accounts
VAT
Payroll and Pensions

But also the things you really need to increase the chances of your business being a success

Management Accounts
Cashflow Reporting & Forecasting
Budgets
Real Time up to the minute information

These are the things that add value and the information you need in order to make the correct business decisions

If you’re not confident with any of this or don’t have the time, getting a licensed accountant to do it for you can actually save you money. It can free up your valuable time which you can use to concentrate on your business. You can also benefit by knowing it has been done correctly and on time.

Mistakes can be costly.

As can missing deadlines.