Rules on reclaiming VAT following registration have been changed by HM Revenue & Customs (HMRC), meaning that some firms could lose money that they had expected would be refunded to them.
Previously, traders that already held stock and assets prior to registering for VAT could reclaim the full amount of VAT paid in respect of those items retrospectively. However, VAT can now only be reclaimed on a pro-rata basis.
A spokesman for HMRC said: “Where a business has goods and assets on hand at its date of VAT registration, an adjustment ought to be made where these have already been used. Where such adjustments have not been made, the business should do so on their VAT return or make a voluntary disclosure to HMRC.”
Anyone waiting for their VAT registration to come through could also be penalised by the new rules if they buy stock and assets prior to registration.
Read more about the VAT changes HERE
If you would like some help with your VAT or Bookkeeping please contact us on 01229 813388
