When you run a business the tax you pay depends on your profit after deducting business expenses. Part of our job as accountants is to help business owners identify all the expenses they can claim to legally reduce their tax bill. This allows them to concentrate on their own speciality without having to worry about having to learn the tax rules themselves.
But what if someone incurred expenses before their business started? Provided that the expenses were in anticipation of starting a business, then they are claimable in the same way as any other expense. For tax purposes such expenses are treated as if they occurred on the first day that the business was in operation. If you are planning to set up in business, you should take advice and start keeping records as soon as possible to maximise your legitimate expense claims.
If a business becomes VAT registered, either at start of trading or once it has grown, it will often be possible to claim back the VAT on earlier costs. Claims can be made for goods purchased up to four years before the VAT registration date, provided you still own them on that date. You can also claim VAT back on business related services, though claims for services only cover the six months prior to registration.