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VAT – Pre-registration

Q: My client has been trading for years but has only just gone over the VAT registration threshold. They want to join the Flat Rate Scheme immediately, but I understand this means they won't be able to get any pre-registration VAT back unless it meets the FRS capex criteria?

A: Actually no, they can still claim pre-reg VAT back in the normal way even if they immediately use FRS. Although s26B(5) VATA1994 states no one using the FRS can deduct input tax, Regulation 55F (1995 VAT Regs) specifically states that s26B(5) does not apply to pre-registration VAT and therefore regarding pre-registration input tax rules (Reg 111 of the 1995 VAT Regs) will apply to FRS users just like any other VAT registered business. The normal pre-reg requirements must still be met however (e.g. goods must have been purchased within the last 4 years and still be on hand at the time of registration, services purchased in the last 6 months etc.).