Can I register for and claim VAT back on business purchases even if I'm not selling (yet?)

Hi, I registered a video game development limited company last year. I'm currently working on a game but: * It's not going to be released in at least year from now. * It will be released on digital gaming platforms. * I have no estimation about possible revenues and the amount of them. However, I'm already paying for goods and services aimed to the creation of marketing material for promoting the game. Am I'm legally allowed to register for VAT and claim it back for those goods and services purchases, even if I don't expect any revenue from the game, any time soon? Even if I could, is there any long term effect or disadvantage I should be aware of? Thanks, -Diego

Hi,
If you have an intention to trade and you can show evidence for this then you have an entitlement to register for VAT.
You are allowed to reclaim VAT on set up costs prior to registering for VAT.
Please see below:
Input tax when VAT paid on goods and services received before VAT registration
VATREG21550
If you register for VAT then you must account for VAT on all of your taxable supplies and keep records and accounts to back up your VAT returns.
Record keeping (VAT Notice 700/21)
Thank you.

Hi, Thanks for your reply. I'm definitely planning to sell the video game, once ready to release, through all the relevant digital platforms (not only within the UK). However, due to the nature of the business I'm not sure how I can formally prove that. Is it enough pointing to the company's/game official website if asked to show some evidence? Thanks, -Diego

Hi,
I would recomend providing any evidence to show that you are in business/intending to be in business so links to websites, purchase invoices, any contracts you have in place etc
Thank you.

Hello, Thanks for providing specific examples. Yes, I could definitely provide links to my company's website(s) and other social profiles and pages, showing I'm actively promoting the product I'm working on, with the intention of releasing it and to trying to have revenues from it. Later on, I may consider as well selling promotional merchandise related to the product. One last question please. So far, all the goods and services I purchased in order to produce marketing material for the game, have been paid using my personal bank account and have been invoiced to me, as I didn't have a business account yet. Now that the account is open and active, could I claim back the VAT paid on those invoices, as a company? Thanks, -Diego

Hi Diego,
In order to treat incurred VAT as input tax then the invoices would need to be in the name of the business.
However if the VAT was incurred prior to the business being incorporated please see the guidance below:
If your business is a corporate body (a company, charity or association), the rules do not allow you to reclaim any VAT on goods or services obtained before the body was incorporated.
But you can treat this VAT as input tax if the:
rules in paragraphs 11.2 or 11.3 would allow you to do so if the goods or services had been supplied to the person who is now registered for VAT
Goods or services were obtained or imported by a person who became a member, officer or employee of the body
Person was reimbursed for the full cost
Person was not a taxable person at the time of the supply or importation
VAT guide (VAT Notice 700) 11. Input tax when VAT paid on goods and services received before VAT registration
Thank you.

Good afternoon, thanks for replying. Simply putting things, I'm the sole director of the limited company I registered last year. I've been paying for goods and services that I'm or will shortly be using to promote the future product sold by the company. All the invoices for those goods and services are under my name as at the time I paid for them, I didn't have a business account set yet for the company. I consulted with a UK lawyer yesterday and they said it would be perfectly fine to claim VAT back for those invoices, once I register my limited company for VAT, and as long as I can prove those expenses were indeed related to my business. I'm not sure the information you gave me matches what they told me, hence I'd like a clarification please. Thanks a lot for your patience and help, -Diego

Hi,
If your business was already incorporated and you received invoices for purchases then the invoices should have been in the name of the business which is now registering for VAT.
If the invoices were received prior to the business incorporating then we can accept that the invoice would be made out to a person who later becomes a director or an employee of the business.
Thank you.