Chapter 20 - Input Tax - When to Recover Flashcards Preview

Paper 2: Corporate Tax & VAT > Chapter 20 - Input Tax - When to Recover > Flashcards

Flashcards in Chapter 20 - Input Tax - When to Recover Deck (6)
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Generally, when input VAT is incurred by a taxable person, it's available for credit. It is deducted from output tax and hence recovered from HMRC



There are conditions to meet before input tax can be reclaimed:
- a supply of goods or services is being made
- the supply must be made to the taxable person who is a taxable person at the time the supply is made
- the supply of good or services must have been made for a business purpose
- the claimant must hold the required evidence of purchase
- input tax on supply must have been correctly charged
- the goods or services being supplied must have a direct and immediate link with taxable supplies made by the business
- input tax must not be specifically blocked from credit


Supply for Business Purposes

If a supply is purchased which is used only partly for business purposes, the input tax is apportioned and only the business portion is credited


Claimant Holds Required Evidence

Required evidence is usually a tax invoice. HMRC can accept other forms of evidence.


Blocked Input Tax

Input tax on business entertaining and motor cars is specifically blocked from recovery


Block Input Tax Notes

Input tax on STAFF entertaining is recoverable
Input tax on company cars that will have no private use is recoverable, as are repair costs