Andrew Needham looks at the procedures for making late claims for input tax.
When a business incurs input tax on its purchases, it is entitled to reclaim the tax from HMRC. But sometimes, through an oversight, it is not claimed on time; so what are the rules for claiming back input tax?
Normally, the input tax on a purchase should be claimed in the VAT period in which it is incurred. So if a business's VAT return period ends in March and it receives an invoice dated 15 February, it should be claimed in the period ending 31 March.
If a business is on cash accounting and pays the invoice on 20 April, it can claim the VAT back on the return ending 30 June.
Late claims for input tax
If a business does not claim back the VAT on a purchase invoice in the correct period, HMRC considers that it needs to be treated as an ‘error correction
