Recovery of VAT after deregistration

Last week we discussed in this blog, how to recover VAT paid prior to registering for VAT.

This week we are going to sketch out the reverse position: how to reclaim VAT after you have deregistered.

According to HMRC, you can make a claim for relief from VAT charged to you on certain services (not goods) supplied after your registration was cancelled and when you were no longer a registered person. You can only claim relief from VAT on those services which, although supplied to you after your registration was cancelled, related to your taxable activities prior to deregistration.

The most usual costs you could claim for are accountants’ and solicitors’ services where the supply could not be made to you until after your registration was cancelled.

There is no relief from VAT on goods supplied to you after the date of cancellation or on services that are not attributable to taxable supplies.

When you claim relief from VAT, you must produce the relevant invoice(s) (originals only) and satisfy HMRC that the services supplied to you were for the purpose of the business carried on by you before the date on which your registration was cancelled. If, when you were registered, your input tax claims were restricted because you had non-business activities, you must apply the same restriction to this claim. You may not claim any relief on VAT incurred for exempt activities.

The deadline for reclaiming VAT under this option is no more than four years after the date it was incurred.

You can also reclaim VAT paid on your invoices issued to customers before deregistration, that subsequently became bad debts after deregistration – to qualify, you will need to have accounted for VAT on the supplies and can meet all the requirements of the bad debt relief scheme.

If you feel that you may be eligible to make a claim under these provisions, please call, we would be delighted to help.