ReClaiming VAT on business expenses

[Payal Nair]

Hello UKBF member,

Question 1- As a business claiming VAT on business expenses, where the invoice shows a VAT number is acceptable. HMRC seem to have a provision for a business working from home to claim pro rata of 20% VAT on the total household utility bill, based on the space occupied by the business in the house. Go to gov.uk and search for Reclaim VAT on business expenses
Has anyone exercised it? How far back ( in years/ months) can I claim a pro rata VAT on utility bills if my business is VAT registered since July 2023 but is overall registered and operational since 2017?

Question 2 - if VAT on accountancy fees can be reclaimed why not VAT on monthly accounting software/ tool like a Xero be reclaimed or SaaS software overall like for daily emails etc.?

Question 3- is there a comprehensive list of what can or can't be claimed in terms of VAT while filing returns? I have been looking at different information online since yesterday and they seem to contradict and confuse further.

Thank you.

 

[DWS]

Hello UKBF member,

Question 1- As a business claiming VAT on business expenses, where the invoice shows a VAT number is acceptable. HMRC seem to have a provision for a business working from home to claim pro rata of 20% VAT on the total household utility bill, based on the space occupied by the business in the house. Go to gov.uk and search for Reclaim VAT on business expenses
Has anyone exercised it? How far back ( in years/ months) can I claim a pro rata VAT on utility bills if my business is VAT registered since July 2023 but is overall registered and operational since 2017?

Question 2 - if VAT on accountancy fees can be reclaimed why not VAT on monthly accounting software/ tool like a Xero be reclaimed or SaaS software overall like for daily emails etc.?

Question 3- is there a comprehensive list of what can or can't be claimed in terms of VAT while filing returns? I have been looking at different information online since yesterday and they seem to contradict and confuse further.

Thank you.

1. Just because you have an Invoice with a VAT number does not mean you can claim the VAT.
VAT on services can be claimed for 6 months before registration although I would question if you have been VAT registered since July 23 why you are only looking at this now.
2. Who says you can not claim the VAT on monthly accounting software?
3. No, but your accountant should be able to advise accordingly.

 

[Payal Nair]

1. Just because you have an Invoice with a VAT number does not mean you can claim the VAT.
VAT on services can be claimed for 6 months before registration although I would question if you have been VAT registered since July 23 why you are only looking at this now.
2. Who says you can not claim the VAT on monthly accounting software?
3. No, but your accountant should be able to advise accordingly.

Thank you DWS, so you mean since I am VAT registered in July 2023, I can claim VAT on services from Jan 2023 onwards? I wasn't aware of the provision earlier and haven't claimed it in 2 years. My accountant pointed it out to me recently, hence I got into further research.

2. It doesn't also say anywhere that I can. My accountant thinks I can't. Hence the confusion.

 

[MikeJ]

HMRC seem to have a provision for a business working from home to claim pro rata of 20% VAT on the total household utility bill, based on the space occupied by the business in the house.

Just to qualify this, the example given on gov.uk assumes 20% of your home is occupied by your business, and therefore you can claim 20% of the VAT.

Charge, reclaim and record VAT

How to charge VAT, calculate VAT, VAT rates, reclaim VAT on business expenses, keep digital records.

www.gov.uk

VAT on domestic utilities is 5%.

 

[Tables Force]

2. It doesn't also say anywhere that I can. My accountant thinks I can't. Hence the confusion.

Why?

Ask them to explain.

 

[Scalloway]

The OP doesn't say what business they are in. It could be that they are partly exempt ie some sales attract VAT, others are exempt meaning that VAT on costs related to them cannot be recovered.

 

[Paul Kelly ICHYB]

My accountant thinks I can't.

Time to get a new accountant!

There are a few good ones on here that you should probably have a chat with!

As always, the devil is in the detail - what business, how regstered etc.

 

[JEREMY HAWKE]

This is wrong
Of course you can claim for accounting software HMRC told us we have to use it They are not going disallow vat claims on these systems

 

[xjr13m]

Question 2 - if VAT on accountancy fees can be reclaimed why not VAT on monthly accounting software/ tool like a Xero be reclaimed or SaaS software overall like for daily emails etc.?

I get my Xero subscription thorugh my accountant, their invoice for this includes VAT. If you're getting your subscription direct from Xero you will find your VAT invoices under 'billing accounts' in your profile section.

 

[Payal Nair]

Dear UKBF community,

Happy Thursday!

I thank you all for your support with valuable advise on my first query. Ozzy asked me to introduce myself. I am a recruiter by profession for 15 years of experience working in the UK, UAE and India market. I have worked both as an agency as well as internal recruiter/ consultant- Talent Acquisition and have industry experience in IT/ Engineering. Architecture & Design and Global Tourism, Culture and Heritage. I have been self employed since 2017, running a small recruitment practice based in London. I look forward to connecting with you all in due course. Have a fantastic rest of the week.

Best,
Payal Nair