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HMRC internal manual

VAT Refunds

Four year cap - other provision: Regulation 111 - Operation of time limits: Pre-registration input tax - Transitional provisions

The three year time limit does not apply where a business became registered for VAT before the 1 May 1997 and has yet to make its first return. Under these circumstances, he may claim his pre-registration input tax on the first return he does make.

Where a person was registered for VAT before 1 May 1997 but didn’t make any returns before that date, there is no time limit on his claiming his pre-registration input tax.

For example, if a business was registered with effect from 1 March 1997 and was not therefore due to render a return before the regulations took effect, he can claim tax incurred on goods before registration under the old rules, no matter how long previously that tax was incurred.

It is important to note that it is the effective date of registration which is used. So if a person registers on 1 June 1997, but the registration is backdated at that time to 1 June 1995, he will be able to claim any pre-registration input tax incurred on or after 1 June 1992 on the first return he is required to render.

This does not apply where a VAT registration is backdated after the registration became effective where, for example, the fact that the person was required to be registered from a date earlier than that with effect from which he was registered was only discovered after he has become registered for VAT.

This is because the first return he is required to render has already been submitted. Thus, if a person registers on 1 June 1997, claims pre-registration input tax back to 1 June 1994 on his first return and it is subsequently discovered that he should have been registered on 1 June 1995, he will not be entitled to recover any input tax that was incurred any earlier than 1 June 1994.