LJS Accounting Services

How Can You Claim VAT Back? A Helpful Guide

How Can You Claim VAT Back? A Helpful Guide

Value Added Tax (VAT) is often complex to understand, but we’re here to help. Understanding the basics of VAT and following the correct procedures will ensure your business receives what it’s entitled to.

But how do you claim VAT back in the UK? To learn more about what you can reclaim VAT on and how to do it, continue reading.

 

What is VAT?

VAT is a consumption tax that’s added to most goods and services sold by VAT-registered businesses in the UK.

If your total taxable turnover for the last year is over £90,000, you must register for VAT. This specific tax is charged on both products and services at each stage of production and distribution.

Ultimately, VAT is paid for by the end consumer, but collected by businesses and forwarded on to the government. Currently, VAT is set at various rates depending on the goods and services provided, proving to be a huge source of revenue for HMRC.

 

Who Can Reclaim VAT?

Any business that is VAT-registered can reclaim VAT. As mentioned, if your business has a taxable turnover of £90,000, then you should be VAT-registered.

However, many businesses voluntarily register when they expect to incur VAT on certain purchases. When you reclaim VAT, you’ll have to do so through a VAT return. It’s important to note that you can’t reclaim VAT on everything, so not every claim will be successful.

 

What You Can and Can’t Reclaim

You’re probably wondering what you can and can’t reclaim VAT back on. You can only claim VAT on goods and services used exclusively for your business, meaning anything used for personal use is unable to be reclaimed. Let’s take a look at some examples of what can and can’t be reclaimed:

You can reclaim VAT back on:

  • Office supplies
  • Equipment
  • Advertising and marketing
  • Utilities
  • Business-related travel expenses

 

You can’t reclaim VAT back on:

  • Goods or services for personal use
  • Business entertainment costs
  • Personal travel expenses

 

In some cases, you can reclaim a proportion of VAT back on certain items used for both business and personal use.

For example, if your mobile is used to take personal and business-related phone calls (say half of your calls are for business purposes), then you can likely reclaim 50% of the VAT on your phone plan.

 

Step-by-Step Guide to Claim VAT Back

When completing a VAT return, you’ll need to calculate the VAT that you have charged on sales. This is known as the output tax. You’ll then need to subtract the VAT you’ve paid on purchases – the input tax. The final figure is what you owe HMRC – or what they owe you in a VAT refund.

If you’re still feeling unsure how to complete the process to reclaim VAT, don’t worry. Follow our simple step-by-step guide:

  1. Verify that your business is VAT-registered
  2. Gather the important documents required (such as VAT invoices and proof of eligibility)
  3. Complete your VAT return (making sure to state how much you want to reclaim)
  4. Submit your VAT return using Making Tax Digital (MTD) software
  5. Ensure you’ve submitted your VAT return by the deadline date
  6. Await a response from HMRC

 

Time Limit to Reclaim VAT

Is there a time limit to reclaim VAT? Yes, there is – generally, repayments can’t be reclaimed more than four years after the end of a tax year. This means that if you claim a refund for the 2024-2025 tax year, you’ll have up until 2029 to reclaim any VAT.

 

MTD for VAT

Since 2022, all VAT-registered businesses must comply with Making Tax Digital Rules (MTD), which was formed to create a more straightforward tax system. MTD allows VAT-registered businesses to get their taxes as accurately as possible.

MTD offers several benefits to VAT-registered businesses in the UK, allowing for fewer mistakes, faster filing, and less time dealing with loads of paperwork.

 

Do You Require Assistance With a VAT Claim Back in the UK?

With the assistance of an accountant, your business’ VAT returns can be accurately prepared in a fully compliant manner.

At LJS Accounting Services, our highly experienced accountants provide reliable VAT and bookkeeping services to clients, ensuring their business’ are up to date with ever-changing VAT legislation and MTD rules. We can help your business by:

  • Advising on VAT registration and compliance
  • Reviewing your business expenses to identify opportunities for VAT reclaims
  • Ensuring that your VAT records are complete and compliant with HMRC regulations
  • Handling the preparation and submission of your VAT returns, taking the stress out of the process for you

 

Trust our experts to provide peace of mind knowing that your VAT affairs are in capable hands. We can give you the time to focus on growing your business without having to worry about VAT returns.

For more information, please contact a member of our team today.

Have You Got Any Questions?

Need to talk to someone? Get in touch with one of our consultants today and we will be happy to help.
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