When reclaiming VAT there are some items you can claim for and others you cannot reclaim. This guide explains how to claim VAT back on business purchases and expenses.
VAT RECLAIM RULES UK: They govern what you can and cannot reclaim.
In most cases you can claim back the total portion of Value Added Tax paid out. That is providing the goods or services you purchased are for use 'only' in the business.
But, the rules change if you use the purchases for personal or private use as well. In this case you can only reclaim the business part of the VAT that you paid out. For example:
In all these cases you must keep VAT records to support any claim. The records need to show how the business proportion qualifies for claiming VAT back. That means you must have received a valid VAT invoice as part of the transaction.
The accounting process allows for reclaiming VAT on vehicles and fuel costs. You can also claim back VAT paid for staff travel. But, there are certain items where reclaiming VAT is not permitted. They include:
In some cases you can reclaim VAT paid on goods or services that you bought before you became registered. But, the purchases made before VAT registration have certain time limitations for claiming.
You must make separate calculations for purchases relating to both 'VAT exempt' and 'taxable supplies'. Examples could include your business accountancy fees and phone bill.
Special rules apply when reclaiming VAT on capital assets such as:
Note: The Capital Goods Scheme can adjust the VAT reclaimed on expensive items over several years.
Once you log in to your HMRC Government Gateway online account you can see any VAT refund owed to you. You then make a claim by submitting your VAT Return.
You will need to give your account details to HMRC. This applies even when you have already set up a direct debit for your VAT Returns. You can add or change them by going into the registration details section in your VAT online account.
A VAT refund usually takes 10 days once HMRC receive your return (sometimes longer). They recommend waiting 30 days before contacting HMRC if you still do not hear anything.
Reclaiming VAT: Rules on Claiming VAT Back (business) in the United Kingdom