Four year cap - other provisions: Regulation 111 - Operation of time limits: Pre-registration input tax
Regulation 111 of the VAT Regulations 1995 gives the Commissioners discretion to allow businesses to deduct as input tax VAT incurred before registration.
However, Regulation 111(2)(b) provides that tax on goods on hand at registration cannot be deducted if it was incurred more than four years before the effective date of registration. This includes VAT incurred on services performed on these goods.
The deduction of input tax on services bought in prior to registration for VAT is limited to those services bought in less than six months before the trader’s effective date of registration.
Businesses are required to claim any pre-registration input tax on the first return they are required to make.
In the event that a trader does not claim his pre-registration input tax in his first return, he has four years from the date on which he was required to render that first return in which to claim it.