1. What Does Being VAT Registered Mean?
When your business is VAT registered, you must charge Value Added Tax on goods or services you sell (known as output tax). At the same time, you can reclaim VAT on certain purchases and expenses you make for your business (known as input tax).
2. If You Are VAT Registered What Can You Claim Back?
You can reclaim VAT on most goods and services bought for business purposes, provided they are used for taxable supplies.
Eligible VAT Reclaims Include:
- Stock and raw materials – Products purchased for resale or production.
- Business equipment – Computers, tools, machinery, office supplies.
- Business premises costs – Rent, utilities, maintenance, repairs.
- Travel and transport – Fuel, business mileage, train fares, flights, parking.
- Professional services – Accountants, consultants, marketing, legal advice.
- Phone and internet bills – If used for business purposes.
- Staff expenses – Uniforms, training, and some subsistence costs.
3. What You Cannot Claim Back on VAT
Some expenses are not eligible for VAT reclaims:
- Entertainment costs – Client hospitality, meals, and entertainment.
- Personal expenses – Purchases not used for business.
- Certain vehicles – VAT on cars cannot usually be reclaimed unless solely for business.
- Exempt goods and services – VAT cannot be claimed if the purchase relates to VAT-exempt activities.
4. Special VAT Reclaim Rules
- Partially exempt businesses – Can only reclaim a portion of VAT if they sell both taxable and exempt goods/services.
- Pre-registration VAT – You can sometimes claim VAT on goods purchased up to 4 years before registration, and services up to 6 months prior.
- Flat Rate Scheme (FRS) – Limits VAT reclaims to capital assets worth more than £2,000.
5. How to Reclaim VAT
- Keep VAT invoices – HMRC requires proof of purchases.
- Submit VAT Returns – Usually every quarter via Making Tax Digital (MTD).
- Claim Input VAT – Deduct it from the output VAT you owe.
- Receive Refund – If input VAT exceeds output VAT, HMRC pays you the difference.
6. Tips to Maximise VAT Reclaims
- Always request VAT invoices from suppliers.
- Keep accurate and organised financial records.
- Review older expenses for pre-registration VAT claims.
- Use accounting software to track VAT automatically.
- Consult an accountant for complex VAT cases.
Frequently Asked Questions
1. If you are VAT registered what can you claim back?
You can reclaim VAT on most business-related purchases like stock, equipment, rent, and travel.
2. Can I claim VAT on fuel?
Yes, if used for business. For mixed personal/business use, only the business portion can be reclaimed.
3. Can I reclaim VAT on a company car?
Only if the car is used 100% for business purposes. Otherwise, it’s usually not allowed.
4. Can I reclaim VAT on meals with clients?
No, entertaining clients is not eligible.
5. Can I reclaim VAT if I’m on the Flat Rate Scheme?
Generally no, except on capital assets worth more than £2,000.
6. Do I need receipts to reclaim VAT?
Yes, valid VAT invoices are required.
Conclusion
Understanding if you are VAT registered what can you claim back helps businesses save money and stay compliant with HMRC rules. By keeping proper records, knowing eligible expenses, and avoiding common mistakes, you can maximise your VAT reclaims and improve your cash flow.