Ever wondered how far back you can reclaim the VAT your company paid? Read on to find out all the information you need to know:
How To Reclaim VAT
Businesses must follow specific procedures established by HM Revenue and Customs (HMRC) in order to reclaim VAT. The procedure involves claiming VAT back on eligible expenses spent for business operations.
A VAT-registered business should ensure effective record-keeping of VAT invoices. Receipts are required as proof of input VAT paid. These must be valid VAT invoices. Businesses can claim input VAT against their output VAT when filing their VAT return. This VAT return gives them the opportunity to make up the difference in business expenses.
Businesses are entitled to a VAT refund if the input exceeds the output VAT. It’s also possible to claim for expenses prior to registration. Companies in the process of VAT registration can claim pre-registration VAT on eligible expenses spent within the correct VAT period.
Reclaiming VAT and filing a VAT return are important parts of maintaining a VAT-registered business’s financial health.
Time Limit For Reclaiming VAT
When it comes to your VAT claim, businesses have a limited term in which they can claim back VAT paid on eligible costs.
In general, you have up to four years from the date of the transaction to claim back VAT. This enables businesses to reclaim VAT paid for VAT-taxable business purposes throughout that time period. Companies must keep precise records of their costs in order to back up their VAT claims.
Businesses that are in the process of registering for VAT can claim pre-registration input VAT on purchases made within four years of their registration date. This allows them to claim VAT paid prior to becoming VAT registered. Those costs, however, must have been used for taxable business activities.
Unclaimed VAT amounts from past periods may be lost if not claimed within the time constraints. Companies should evaluate their costs on a regular basis and file VAT claims as soon as possible. This is the most effective strategy to prevent missed VAT refunds and to keep unclaimed VAT to a minimum.
Businesses can boost their cash flow by remaining diligent and keeping track of their VAT reclaimable amounts.
Conclusion
Businesses only have up to four years to claim VAT back on qualified expenses. This enables you to recuperate considerable amounts paid for goods and services that were used for VAT reasons. Keeping track of invoices and making sure you’re properly registered for VAT can be a demanding undertaking.
This is when an accountant’s knowledge comes in handy. You don’t want to have any missed VAT you could have claimed! Businesses can guarantee correct record-keeping and timely filing of VAT claims by hiring a skilled accountant. Accountants are qualified for these jobs specifically.
Hiring professional services can save you some time and allow you to focus on your main tasks, instead.
Sources
https://www.thefriendlyaccountants.co.uk/happens-i-forget-claim-vat-time/