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VAT deduction for assets used prior to registration

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Revenue and Customs Brief 16/2016: treatment of VAT incurred on assets that are used by the business prior to VAT registration clarifies HMRC’s existing policy on deduction of VAT for assets used by a business prior to registration, which it believes has not always been applied consistently in relation to business assets ‘consumed’ before registration. The brief restates HMRC’s existing policy in the following terms:

  • VAT on services received within six months of the effective date of registration and used in the business at that date is recoverable in full;
  • VAT on stock is deductible to the extent that the goods are still on hand at the effective date of registration (for example, apportionment may be required); and
  • VAT on fixed assets purchased within four years of the effective date of registration is recoverable in full, providing the assets are still in use by the business at that date.

HMRC will be amending its guidance to reinforce the position.

Read Revenue and Customs Brief 16/2016 at

Issue: 1331
Categories: News