HMRC announced a new “interpretation” of policy towards pre-registration input tax last year. Traditionally, newly registered parties could look at goods and equipment on hand at the date of registration and go back four years. If you had a valid VAT invoice you could recover the VAT.
Last year policy changed and it was no longer a simple case of claiming all the VAT back – you had to apportion for depreciation. It was claimed that this was always the Commissioners policy and it was not strictly interpreted. This caused consternation in the profession and made advising newly VAT registered clients difficult.
Such changes in policy are always destined to be debated at Tribunal. I have received news of HMRC withdrawing from a first tier tribunal that was scheduled to consider the question of VAT recovery of a “van” on a pre-registration claim. Is this another “u-turn” or have HMRC seen the light?
If you have had any VAT blocked on your first return then you may wish to revisit the claim and talk with our VAT specialist Nigel Smith.