VAT incurred on pre-registration services

Under previous guidance, HMRC stipulated that VAT could only be recovered on services acquired pre-registration as follows:

• Services received not more than six months before registration, that relate to business activities carried out after registration.

Therefore, for services where there was pre- and post-registration use, no VAT could be recovered under this guidance.

This position was confirmed by HMRC’s Policy Team, who stated that no apportionment should be applied to pre-registration services.

HMRC have now updated its guidance as of 2 June 2025 to allow for VAT recovery on services acquired pre-registration.

The example HMRC have given is that of a subscription which will be used from 1 September 2024 to 31 August 2025. Under this example, HMRC will allow schools to recover input tax based on the taxable use in the year (8/12ths in this example). 

For those schools that did not recover VAT on pre-registration services on the first VAT return, a claim should be made as an error correction or part of the annual adjustment at year-end.

For further guidance on how this change could impact your organisation, please contact Kieran Smith, or your usual Crowe contact.