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chapter four of six

Claiming VAT back

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Small business guides > Quick guide to VAT > Claiming VAT back

Claiming VAT back

VAT-registered businesses can claim back the VAT they pay on business expenses. And in some cases, they can claim back VAT that they’ve paid to HMRC. Let’s take a look at what you can claim back and how.

When you can claim VAT back

You can claim VAT back when:

  • you’ve purchased goods or services for your business

  • a customer leaves you with a bad debt

VAT on business expenses

When you buy something for your business, you’re usually charged VAT. If you’re registered for VAT, you can claim that back. You do this by reporting how much VAT you paid during a period of time. HMRC balances the amount you’ve paid against the VAT you’ve collected to work out your refund or bill.

Business expenses include things like stock, work tools, computers, phones, and stationery. You can’t claim VAT on client entertainment.

How to claim VAT

When expenses are split between business and home

If you buy something like a laptop that you use at home and in the business, you can claim part of the VAT back. You will need to work out what portion of the purchase is business-related and show how you arrived at that number.

When you’re not collecting any VAT

You can claim back VAT on supplies even if the end product or service that you sell is 0% VAT rated. But you can’t claim VAT back if the end product or service is VAT exempt.

VAT relief on bad debts

If you raise an invoice and pay VAT on the expected income but your customer doesn’t pay you, then you have a bad debt. You can claim back the VAT from HMRC on your next return. If the customer pays later, you can repay the VAT then.

Learn more about VAT and bad debts

Chapter 5: Working out VAT – refund or bill?

Working out the amount of VAT to add to your goods or services is easier than you think. Here’s a simple way to calculate the VAT to charge.

Read next chapter

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Everything you need to know about VAT in the UK.

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