VQOTW: Late Claims for Input Tax

My client is a retired solicitor who deregistered from VAT five years ago. He has been in touch to advise he has received an invoice from a barrister who was working on a case for him before he retired. Apparently, the case has recently been decided and under the agreement they had, the barrister has now invoiced for her fees. Is my client able to claim the VAT element or is it now too late as it is capped?

Download App

A. You are correct in your understanding that late claims for input tax are restricted to four years from the due date of the return in question (Regulation 29 VAT General Regulations SI 1995/2518).

The entitlement to make a claim to deduct input tax arises in the accounting period in which the taxable person has both incurred the input tax and received the documentary evidence, for example, the VAT invoice, to support its deduction.

The taxable person has four years from the due date of the return for the accounting period in which the entitlement to make the claim to deduct arose, in which to make a late claim for input tax.

However, in your client’s case there has been no error and no late claim. This is because the evidence, in the form of the barrister’s invoice, has only just been issued and received.  As such, provision exists for businesses to recover VAT post-deregistration, provided the services have been incurred in connection with a taxable business activity carried on during the period of registration. Claimants should complete a VAT 427 form, available via the following link https://www.gov.uk/government/publications/vat-reclaim-or-claim-vat-relief-on-cancelling-vat-registration-vat427.

Although as a former solicitor, your client is likely to have been fully taxable, it should be borne in mind that if the business was subject to some restriction in terms of input tax recovery, for example partial exemption, then the relevant recovery rate should be applied.

If you have a VAT query why not contact the VAT Advice Line on 0844 892 2470 to discuss the implications. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.

Back to Community

VAT Advice Consultant
0844 892 2470

Sally is the Team Leader of the VAT Advice and Consultancy team at Croner Taxwise. She has worked in VAT since 1990, including eight years spent with HMRC, both as an Assurance and Enquiries Officer involved in presenting seminars and business education. Since joining private practice in 1999, Sally has specialised in providing VAT technical advice to a variety of clients, ranging from small one-man bands to large multi-national corporations, on the full range of VAT technical matters.

VQOTW: Subletting Opted Premises
VQOTW: Dry January? Input Tax Recovery on Alcohol
VQOTW: The Timeline and Compliance Requirements for Making Tax Digital