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Reclaiming VAT on purchases made before VAT registration

Reclaiming VAT on purchases made before VAT registration

If you buy goods or services while you're setting up your business and/or before you've registered for VAT, you may be able to reclaim the VAT you paid on those items.

You can generally reclaim VAT on goods you bought up to three years before you registered for VAT, and services you bought up to six months before you registered.

There are other conditions you must meet in order to reclaim this VAT including keeping particular records of what you bought and how you use, sell or dispose of the items.

This guide explains what you need to do to reclaim this VAT.

On this page:

Reclaiming VAT on items you bought before registration
Reclaiming VAT on goods you bought before registration
Reclaiming VAT on services you bought before registration
Records you must keep
If your business is 'partly exempt'
If you're taking over a business as a going concern

Reclaiming VAT on items you bought before registration

If you bought goods or services for your business before you registered for VAT you may be able to reclaim the VAT you paid on those items:

for goods: you can reclaim VAT up to three years before you registered for VAT
for services: you can reclaim VAT up to six months before you registered for VAT

You should include this VAT on your first VAT return.

Find out how to fill out a VAT return

To be able to reclaim this VAT you'll need to meet the criteria as explained in the following sections.

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Reclaiming VAT on goods you bought before registration

You can reclaim VAT on goods you bought or imported no more than three years before you were registered for VAT if the goods:

were bought by you as the 'person' who is now registered for VAT
are for your VATable business purposes, eg they do not relate to any exempt items that you sell
are still held by you or they have been used to make other goods you still hold

You can't reclaim VAT on goods that you've completely used up before you registered for VAT such as petrol, electricity or gas.

Check what a 'person' is for VAT purposes

Find out about exempt and partly-exempt

Apportioning goods used for both business and non-business purposes

If you buy goods that you use for both business and non-business purposes, you can only reclaim VAT on the proportion of the goods that you use for business purposes. Non-business purposes include items for private or charitable use.
For example if you buy a computer and use it a third of the time for business purposes, you can only reclaim a third of the VAT.

Find out how to reclaim VAT on items used for both business and private purposes

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Reclaiming VAT on services you bought before registration

You can reclaim VAT on services you bought during the six months before you registered for VAT if the services were:

bought by you as the same business ('person') who is now registered for VAT
for your VATable business purposes, eg they do not relate to any exempt items that you sell
not related to goods which you disposed of before you were registered for VAT - for example, repairs to a machine you sold before you were registered

Check what a 'person' is for VAT purposes

Find out about exempt and partly-exempt supplies and businesses

Apportioning services used for both business and non-business purposes

If you buy services that you use for both business and non-business purposes, you can only reclaim VAT on the proportion of the services that you use for business purposes. Non-business purposes include items for private or charitable use.

For example if you use your Internet access service a third of the time for business purposes, you can only reclaim a third of the VAT on that service.

Find out how to reclaim VAT on items used for both business and private purposes

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Records you must keep

If you want to reclaim VAT on goods and services you bought before you were registered, you must have a valid VAT invoice or receipt for each item. You must also keep the following records.

For goods

You must keep a detailed stock account of the goods on which you are reclaiming VAT. Your records must show:

a description and quantities of goods you bought and the dates you bought them
when you have used any of the goods you bought to make other goods
when you have disposed of any of these goods after you were registered for VAT

For services

You must keep a detailed account of the services for which you are reclaiming VAT. Your records must show:

a description of the services and the dates when you received them
if any services you received relate to goods you disposed of after you were registered for VAT

We may ask to see these records before you can receive your VAT repayment.

Find out about keeping correct VAT receipts

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If your business is 'exempt' or 'partly exempt'

There are some goods and services on which VAT is not charged. These are exempt from VAT. Items which are exempt from VAT include insurance and finance, education and training and charitable fund raising.

If all of the goods and services you sell are exempt, your business is 'exempt' and you will not be able to register for VAT. This means you won't be able to reclaim any VAT on your business purchases.

If only some of the goods and services you sell are exempt then your business is 'partly exempt' and you'll be able to get back some of the VAT you pay on your business purchases.