When you register for VAT you can reclaim VAT on your historic purchases as explained in the HMRC document below:


This guide helps demonstrate how to calculate and journal the VAT amount to be reclaimed, however, it is always advised to speak to your accountant when undertaking this task.

Calculating VAT to be reclaimed

On a non-VAT registered scheme in Clear Books you can record VAT on purchases by enabling this option on the Settings > Configure system > Toggle features > Invoicing & expenses tab:

You can find out the VAT amounts on transactions created while on a non-VAT registered scheme by exporting the purchase ledger (or purchase line items report) from the Tools > Export menu:

Open up the exported CSV and you will be able to filter by transactions with VAT amounts during the dates that you were not VAT registered.

If you haven't been using Clear Books for the full length of time that you are eligible to reclaim VAT, then you may need to speak to your accountant to help calculate the full amount.


Now that you know the amount of VAT that you can reclaim, you can create a journal to adjust the VAT return. The journal will need to Dr VAT control and Cr Expenses, also make sure to tick the Purchase check box, beside the VAT control line.

Head to the Tools > Journals menu. In this example, the amount to reclaim is 500 and I will be using the Cost of Sales account code as the expense account. 

If you want to update boxes 4 and 7, you can create a three line journal which will Dr VAT control Dr Expenses and Cr Expenses.