pre-VAT reg VAT claim possible - under FRS?

[VectraMan]

Having the invoices in the company name does help and I would certainly recommend doing that if possible. However, in most cases the expenses are pre-incorporation expenses aswell as pre-registration expenses and so this is not always possible. Just make sure you can justify the expenses as being wholly and exclusively for business.

I did this. Unless you start your Ltd. without registering for VAT, you're not going to have invoices in the company name because it doesn't exist yet.

FRS won't make any difference because it's before you joined the FRS.

[TheCyclingProgrammer]

IIRC

You can't claim the VAT on "Capital Inputs" unless it exceeds £2000.00 and is on one invoice making up that amount, if you are on FRS? So, three invoices

1. £550.00
2. £850.00
3. £950.00

Totalling £2350.00 but can't claim the VAT, due to that anomaly of FRS.

Generally yes, but OP is specifically talking about pre-registration expenses.

[TheCyclingProgrammer]

Having the invoices in the company name does help and I would certainly recommend doing that if possible. However, in most cases the expenses are pre-incorporation expenses aswell as pre-registration expenses and so this is not always possible. Just make sure you can justify the expenses as being wholly and exclusively for business.

Good point. This HMRC manual document goes into a bit more detail and specifically distinguishes between "pre-registration" and "pre-incorporation". The intent must be that the purchase is made by the entity that is VAT registered but obviously the entity doesn't exist pre-incorporation, so I think its just a case of common sense:

VIT32000 - How to treat input tax: pre-registration, pre-incorporation and post-deregistration claims to input tax under regulation 111

Also discussed on this AccountingWeb thread:

VAT on pre incorporation purchases | AccountingWEB

In short: there are various rules and conditions and they are different for goods vs services so anybody who wants to reclaim pre-registration/incorporation VAT should probably do so *after* consulting their accountant first IMO.

[Jessica@WhiteFieldTax]

I don't think that is true though is it?

A very quick search doesn't turn up anything determinative, but para 7.6 of Notice 733 seems to suggest so by virtue of prescribing a differential treatment for sale of assets purchased (and vat reclaimed) pre registration.

One difficulty we face - flat rate and bank interest was an example - was that the only definitive guidance from HMRC is Notice 733, and if thats silent then things become murky.

[mudskipper]

So why don't accountants suggest paying a year up front before registering for FRS, so the VAT can be reclaimed?

I wish mine had.

[Jessica@WhiteFieldTax]

So why don't accountants suggest paying a year up front before registering for FRS, so the VAT can be reclaimed?

I wish mine had.

Taxpoint rules would prohibit this I suspect (haven't gone back to look at them in detail though for chapter and verse)