How to claim VAT back?

3 min read

If you’re a VAT registered business operating in the UK, you’ll need to understand when and how to claim VAT back. Let’s investigate a VAT claim back, who can claim, what you can claim for, and when to do so.

Who can claim VAT back?

There are a few determining factors which decide whether you can claim VAT back. So, who exactly can claim VAT back and what are the criteria involved?

  • Your business earns over the threshold of £85,000 in taxable turnover and have completed your registration for VAT.
  • You’re under the turnover threshold yet have chosen to voluntarily register for VAT.
  • Your business has paid ‘input VAT’ or VAT that’s charged to you as part of your business expenses such as purchasing materials or wholesale supplies.
  • You have completed a VAT return.

Will you get a VAT refund?

This is a more nuanced question. While you can claim back any VAT you paid as part of your business expenses, you may still owe the HMRC after you’ve claimed all your eligible VAT.

  • If you paid more in VAT than you received, then yes, you’ll get a refund from the HMRC.
  • Adversely If you have paid less VAT than you received, you’ll owe the HMRC the difference and not the other way around.

How to claim VAT back?

So, how do you claim VAT back? 

Firstly, it pays to invest in time with a trusted bookkeeper, accountant, or advisor.  These tax professionals will not only have invaluable advice around VAT claims in general, but they’ll also accurately process your claim on your behalf.

If you choose to go it alone and claim your own VAT, you must fall back on the meticulous records you’ve been (hopefully) keeping. 

Most reasonable business owners will have been recording the VAT they’ve been charged while running their business – likely through their cloud accounting software. Not only is this the most accurate and easily approached method, but your software will also make some automated calculations on your behalf.

Making VAT digital

Furthermore, a digital VAT record for most businesses is not only advantageous, but also now necessary through the 2019 ‘Making Vat Digital’ scheme.

This means you need to use compatible software to record VAT inputs, outputs, and transactions.

So be sure you sign up for a compatible cloud accounting solution as soon as you launch your business to remain compliant and in control of your VAT account.

What can I claim VAT back on?

In simple terms, you can claim VAT back on any business-related purchase for which you paid VAT. 

This is known as VAT input as it was an ‘input’ into your business operations, products, or services. 

What’s allowable to claim back?

  • You can claim any VAT you paid for products and services used solely for business purposes. This includes things like equipment, materials, stock, and furniture.
  • The inputs in question must have had VAT attached to the price.
  • You may claim a relevant portion of an input if you split its use between personal use and business use. For example, a mobile phone or laptop.

When can I claim VAT back?

You’ll be able to claim your VAT when it’s time for you to submit a VAT return. When you initially register for VAT, you’ll be given a schedule for your business to do so.

It’s usually one month and seven days after the end of your accounting period. To be sure of your deadlines, please check your VAT online account. Be sure you never miss a deadline for your VAT return or VAT claim back, as penalties can be attracted.