1. What Is a VAT Claim?
A VAT claim is the process by which a VAT-registered business recovers the Value Added Tax (VAT) paid on eligible business expenses. This allows companies to offset the VAT they’ve paid against the VAT they’ve charged customers, paying only the difference to HMRC.
2. Who Can Make a VAT Claim?
You can claim VAT if:
- Your business is VAT-registered with HMRC.
- The expenses are for business purposes.
- You have a valid VAT invoice or receipt.
3. What You Can Claim VAT On
Common eligible expenses include:
- Goods purchased for resale.
- Business equipment and tools.
- Office supplies and utilities.
- Business travel costs (some restrictions apply).
- Certain services from subcontractors.
4. What You Cannot Claim VAT On
You generally cannot claim VAT on:
- Personal purchases.
- Entertainment expenses for clients (except for staff).
- Business assets used for both personal and non-business purposes without adjustment.
- Certain vehicles unless they’re exclusively for business use.
5. How to Make a VAT Claim
- Keep accurate records and VAT invoices.
- Submit a VAT Return via HMRC’s online portal.
- Include all eligible purchases for the accounting period.
- Deduct the total VAT on purchases from the VAT charged on sales.
6. Claiming VAT on Imports and Overseas Purchases
If your business buys goods from outside the UK:
- VAT may be charged at the border, which you can reclaim.
- For EU imports, use the postponed VAT accounting system to reclaim VAT in your return.
7. Deadlines for VAT Claims
You generally have four years from the date of purchase to claim VAT on expenses, provided you were VAT-registered at the time of purchase.
8. Adjusting VAT Claims for Mixed-Use Purchases
If an expense is partly for personal use, you can only claim the VAT proportion related to business use.
9. Common Mistakes to Avoid
- Claiming without valid VAT invoices.
- Missing filing deadlines.
- Claiming VAT on ineligible expenses.
- Poor record-keeping leading to HMRC disputes.
10. Benefits of Making VAT Claims
- Reduces your overall tax bill.
- Improves cash flow.
- Ensures compliance with HMRC rules.
- Maximises business cost efficiency.
Frequently Asked Questions
Q1: Can I claim VAT without a VAT receipt?
No, HMRC requires a valid VAT invoice or receipt.
Q2: Can I claim VAT on fuel?
Yes, but only for the business portion of use; a fuel scale charge may apply.
Q3: Can startups claim VAT on pre-registration expenses?
Yes, for goods bought up to four years before registration and services up to six months before.
Q4: How often can I claim VAT?
Typically quarterly, when you submit your VAT Return.
Q5: Can I claim VAT on second-hand goods?
Yes, but special margin schemes may apply.
Q6: What happens if I overclaim VAT?
You must correct it in your next return or contact HMRC to repay the overclaimed amount.
Conclusion
A VAT claim helps VAT-registered businesses recover tax paid on legitimate business expenses, improving cash flow and reducing overall costs. By keeping accurate records, following HMRC rules, and claiming only on eligible purchases, your business can make the most of this tax-saving opportunity.