• Skip to primary navigation
  • Skip to main content
  • Skip to footer

Top notice bar

Call us on 08000 388799

Avanti Tax Accountants HomepageAvanti Tax Accountants

Bookkeeping, Accountancy and Taxation services

  • Home
  • About Us
  • Our Services
    • Bookkeeping & Accountancy
    • Corporation & Personal Tax
    • Payroll & CIS
    • Company Secretarial Bureau
    • Budgeting, Forecasting & Business Valuations
    • Mentoring & Business Coaching
    • Software & Training
  • Our Accountants
  • News & Insights
  • Send An Enquiry
Home » News & Insights » Pre-incorporation input tax

Pre-incorporation input tax

Posted on 26th September 2019

It is often forgotten that input tax can be claimed on certain expenses incurred before a company is incorporated, as long as a number of conditions are met:

  • the goods or services were supplied to a person who became a director, employee or shareholder once the incorporation had taken place;
  • the company pays for, or undertakes to pay for, the expenses in question
  • in the case of services, they were incurred within six months of the VAT registration, a time limit of four years applies to goods;
  • the goods or services have a direct link to future taxable supplies made by the company.

HMRC’s argument

That invoices were dated between 22 February 2016 and 5 January 2017. The company was incorporated on 8 July 2016 and became VAT registered on 1 August 2016 i.e. the six-month time window for services was clearly met. But HMRC disallowed input tax on the following grounds:

  • the letter of engagement was between the director and in this case the company lawyers – therefore, the supply of services was to him as an individual and not the company;
  • the costs were of benefit to the director and not for the company.

Contradiction

The tribunal noted that if HMRC insisted that invoices and contracts were only ever made out to the VAT-registered business, then no pre-incorporation input tax claim would ever succeed.

You can’t have invoices addressed to an entity that didn’t exist at the time! The tribunal commented: “We have found HMRC’s case somewhat confused.”  [1]

[1] Reproduced from Accountingweb

Share this post:

Share on TwitterShare on FacebookShare on LinkedInShare on E-mail

Filed Under: Exclusive News

Disclaimer:- The information contained herein is given by way of general guidance only and no action should be taken solely on the basis of the information contained herein. The Avanti Group (UK) Ltd will be pleased to provide further guidance on the issues, and how they might affect you. No liability is accepted by the firm for any action taken without seeking appropriate professional advice

Footer

Navigate

  • Find An Accountant
  • About Us
  • News & Insights
  • Privacy Policy
  • Letter Of Engagement

Our Services

  • Software & Training
  • Mentoring & Business Coaching
  • Budgeting, Forecasting & Business Valuations
  • Company Secretarial Bureau
  • Payroll & CIS
  • Corporation & Personal Tax
  • Bookkeeping & Accountancy

Get In Touch

Tel: 08000 388799
Send us an enquiry

  • Facebook
  • Instagram
  • Twitter
Copyright © 2023 Avanti Tax Accountants · All Rights Reserved
Part of The Maurice J Bushell & Co Ltd Franchise (UK) Ltd · Company Reg: 10407313 and The Avanti Group (UK) Ltd · Company Reg: 04635630 · Created by Purple Hippo
  • So we can contact you to discuss your enquiry
  • So a member of our team from your area can contact you
  • By clicking ‘Send Enquiry’ you agree to receive contact from Avanti Tax Accountants using the details given above. We respect your personal information and your privacy and will not share or sell your information to other organisations. Please read our Privacy Policy for more information.
  • This field is for validation purposes and should be left unchanged.