There are special rules that determine the recoverability of VAT incurred before a business registers for VAT. This type of VAT is known as pre-registration input VAT. There are different rules for the supply of goods and services and VAT can only be reclaimed if the pre-registration expenses relate to the supply of taxable goods or services by the newly VAT registered business.The time limit is backdated from the date of registration and is:4 years for goods on hand, or that were used to make other goods on hand; 6 months for services.The VAT should be reclaimed on the business’s first VAT return. When a new VAT registration is applied for there is an option to backdate the registration (known as the effective date of registration), this option should be carefully considered if there is additional input tax that would then be recoverable. However, on the other side of the coin, there may be additional VAT due on sales within the back-dated period so careful consideration must be taken to ensure optimum recovery of pre-registration expenses.There are special rules for partially exempt businesses and for businesses that have non-business income and for the purchase of capital items within the capital goods scheme (CGS).