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VAT on Pre-Incorporation Expenditure

Newsletter issue - July 08.

As you prepare to set up your company you may buy assets ready for that company to use, or pay for services such as legal or accountancy, that relate to the new business. You can reclaim the VAT incurred on those goods and services you purchased personally for the company if all of the following conditions apply:

1. You become a director, company secretary or employee of the company, and the company fully reimburses you for the goods and services you bought on its behalf.

2. You were not VAT registered when you made the purchases and have not used those items for any other purpose.

3. You have not reclaimed the VAT on those purchases through another business.

4. The company must reclaim the VAT in its first VAT return after becoming VAT registered.

There are also some restrictions on the goods and services on which the VAT can be reclaimed.

Goods must be:

Services must be: