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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1

Introduction

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

2

Conditions

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

3

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

4

Claimant Holds Required Evidence

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

5

Blocked Input Tax

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

6

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