Pre-registration VAT on depreciating assets

HMRC currently expect you to make an adjustment for deprecation if you register for VAT and have an asset which has been used to make supplies pre-registration.

However the position has been challenged. HMRC stated this had always been their policy but an example from guidance in 2005 clearly did not restrict the VAT.

HMRC have therefore taken legal advice and have told compliance officers not to assess tax in the meantime if an adjustment has not been made by a business.

However if it is found that HMRC are correct a subsequent adjustment will be expected.