Pre-Trade Expenses Flowchart

What sort of claim can be made for pre-trade expenses which were paid for out of personal funds?

First, consider this report on Pre-Trade Expenses, and then you should come back here and use this flowchart to help establish one of four possible answers which might apply.

There is a lot of white space on this page. It is here deliberately, in order to allow sufficient boundaries between different questions and answers.

Step 1

Establish the following dates:

Day one of your business.
Three years before day one.
Your effective date for VAT registration (if any).
Six months before the date of your VAT registration (if any).
Three years before the date of your VAT registration (if any).


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Step 2

Right now, is this item being used exclusively or primarily for business?

No – End 1Yes – Step3

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Step 3

Was this item bought more than 3 years prior to day one of your business?

No – Step 5Yes – Step 4

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Step 4

Are we talking about goods?

No – Step 11Yes – End 2

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Step 5

Is your business VAT registered?

No – End 4Yes – Step 6

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Step 6

Are we talking about goods?

No – Step 9Yes – Step 7

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Step 7

Was this item bought within the 3 year period prior to your effective date of VAT registration?

No – End 4Yes – Step 8

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Step 8

Do you have reasonable evidence of the cost and the VAT figure?

No – End 4Yes – End 3

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Step 9

Are we talking about services?

No – Step 6Yes – Step 10

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Step 10

Was this service bought within the 6 month period prior to your effective date of VAT registration?

No – End 4Yes – Step 8

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Step 11

Are we talking about services?

No – Step 4Yes – End 1

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End 1

This item cannot be claimed.

Stop

Start again

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End 2

Claim it using the the “fair market value” rule. Use a non-VAT form.

Stop

Start again

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End 3

Claim it in full. Use a VATable expense form.

Stop

Start again

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End 4

Claim it in full. Use a non-VAT expense form.

Stop

Start again

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