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How Far Back Can You Claim VAT on Expenses? There are rules set out by HMRC which need to be followed by anyone who wants to claim back VAT on expenses that were either missed in previous VAT quarters or paid before they were VAT registered.
How far back you can claim VAT on expenses depends on the circumstance you find yourself in.
Commonly people find themselves wondering if they can reclaim VAT if they:
- Are newly VAT registered and want to claim back VAT on expenses before registering;
- Accidentally missed out on claiming VAT on expenses in previous VAT quarters.
The rules for each scenario are different, so let’s look at each to figure out how far back you can claim VAT on expenses.
How Far Back Can Your Claim VAT on Expenses When You First Register?
When you are newly VAT registered the amount of VAT you can claim back depends on the type of expenses you have paid for as well as when.
You can go back and claim VAT on expenses as follows:
- 4 years for goods you still have, or that were used to make other goods you still have;
- 6 months for services.
How to Claim Back the VAT
You should claim back any VAT on your first VAT Return by adding them to your Box 4 figure.
You should also keep full records including:
- invoices and receipts
- a description and purchase dates
- information about how they relate to your business now
Graeme started a consultancy business on 1 May 2017 and he bought a laptop for £1,000+VAT.
His business grew. He was required to register for VAT. He also employed a bookkeeper to help him for £500 plus VAT from 1 September 2018.
His VAT registration date was 1 June 2019.
On Graeme’s first return, he can claim as follows:
- For his laptop purchased on 1 May 2017, since he was still using it and is within the
- On bookkeeping fees for 6 months prior to his VAT registration date from 1 June 2019.
How Far Back Can Your Claim VAT on Expenses That Were Missed in Previous Returns?
Errors can happen and invoices can get missed.
But missing out on claiming back VAT on expenses means you have been paying too much VAT.
You can go back 4 years to reclaim any VAT that was missed previous VAT returns provided the error is less than £10,000.
These types of errors can simply be included in your next VAT return. There is no need to tell HMRC but you should keep detailed workings, just in case you are inspected.
Errors of More Than £10,000
Where the VAT on expenses that were missed on previous returns totals more than £10,000, then a special disclosure needs to be made to HMRC in order to reclaim the VAT. You’ll need to fill out a Form VAT 652.
HMRC Error Reporting VAT Form 652
If you need to reclaim VAT that was missed of more than £10,000 you will need to claim for your backdated VAT using a Form VAT652.
You’ll need to include details about your business on the form. Most importantly as well details of what the corrected amount should be, box by box.
If the mistake spans more than one quarter, multiple sections will need to be filled in.
Once completed you’ll need to print and post the form to HMRC VAT Correction Team at:
HM Revenue and Customs
VAT Error Correction Team – SO864
If you are unsure on how far back you can claim VAT or have any questions, call HMRC VAT helpline on 0300 200 3700.
Always keep full records of your backdated VAT claim including copies of invoices and details how you made your claim.
Updated 28 June 2019
Anita is a Chartered Accountant with over a decade of experience taking self employed business owners from financially confused to business savvy.
She is the creator of the ‘Go Self Employed’ website, which her corner on the internet where she makes self employment less terrifying.