- Pre-registration VAT qualifying under Regulation 111 is treated as input VAT and can be recovered using normal rules, without adjustments for pre-registration use.
- Regulation 111 allows pre-registration VAT into the system, but recovery is determined by standard partial exemption methods, such as use-based approaches.
- The Tribunal rejected HMRC’s argument to reduce recovery based on pre-registration use, focusing only on post-registration use or intended use.
- HMRC’s proposal for a depreciation-style adjustment was dismissed as having no legal basis.
- The decision clarifies that no extra HMRC restrictions apply to recovery unless legislated, benefiting sectors like healthcare, education, and financial services, as long as costs weren’t fully consumed pre-registration.
Source: meridianglobalservices.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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