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Can I claim VAT back on purchases made before my company formation?

Yes, you would be entitled to claim back the VAT on any business assets you purchased that you will continue to use in the business within the last four years (i.e prior to becoming VAT registered). Four years for fixed assets & six months for services.

If you're a new limited company you must have a valid VAT invoice or receipt. Enter it into Xero under "Expenses" with the date being the date of the first day of your current accounting year and charged to the relevant expense account with the payment type selected as "Director's Expenses".

If you were previously a sole trader, and the costs were incurred before you began trading as a limited company you may wish to consult an accountant so you can claim the appropriate tax relief.

If your previous entity was that of a sole trader, please do not enter the company formation costs into your Xero account but instead contact us with details of the expenses so that we can incorporate these into your next VAT return (if applicable).


What if I am due a VAT refund?

When you receive a rebate from HMRC you will need to record it in Xero

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