VIT33000 - How to treat input tax: late claims for input tax
Input tax claims should be made in the accounting period in which the tax on the relevant goods or services became chargeable. This is referred to as the proper period.
There are times when a claim cannot be made in the proper period. For example, the supporting evidence may not have been received.
If tax is not deducted in the proper period due to an error a business can recover the tax in a later period under regulation 35. See Notice 700/45 How to correct VAT errors and make adjustments or claims. Recovery of input tax outside the proper period when there is no error is subject to the Commissioners’ discretion under regulation 29.
HMRC has limited discretion to allow late claims to input tax. A claim cannot be made if the capping limit has passed for the return in which the tax should have been claimed.
A partly exempt taxpayer should ensure that any late claimed input tax is recovered only to the extent that it would have been when the tax became chargeable.
HMRC staff should consult Tax Administration Policy Team if they think the delay in claiming input tax has been contrived to avoid liability to any form of penalty.
HMRC staff should consult Deductions and Financial Services Team if they think the delay in claiming input tax is an attempt to manipulate a partial exemption method.