We are having a debate and we cannot decide who is right.
A client became VAT registered for Nov 2020. He has £8,000 old gross expenses that can be claimed. he has claimed gross amount when he did the year-end accounts in prior years. he thought as the corporation tax rate was 19%, he can only claim 1% VAT back now.
However, my thought is that when he calculated corporation tax, the VAT included was not 19%, but 19% x 20% .8% (VAT on gross). hence he can claim back the rest 16.2% back.
Provided that the criteria are met, the reclaimable VAT is the amount shown on the suppliers’ VAT invoices, and should be claimed in box 4 of the VAT return. I can’t see why Corporation Tax would restrict any ability to claim VAT.
I have no involvement in Corporation Tax though, so don’t know what impact any retrospectively reclaimed VAT may have on CT returns. It might be that the VAT claimed would be regarded as a reduction in expenses for the year in which it was claimed? But you’d need someone with CT knowledge to confirm.