Claiming input tax

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Claiming input tax
  • General rule
  • What items subject are subject to an input tax restriction?
  • Can input tax be claimed businesses that have not started to trade (intending trader)?
  • Procedure for recovering input tax
  • Group registrations
  • Transfer of a business as a going concern (TOGC)
  • Late claims
  • Early claims
  • Estimated claims for input tax
  • Can customers claim VAT charged on an unauthorised invoice?
  • Can businesses recover VAT associated with VAT evasion?

This document discusses these in detail, together with VAT on pre-registration, post-registration and post-deregistration; procedure for recovering input tax; group registrations; transfer of a business as a going concern (TOGC), late claims; early claims; and estimated claims for input tax.


This guidance note provides an overview of when input tax can be reclaimed and should be read in conjunction with the What is input tax and other notes in the Claiming input tax subtopic VATA 1994 ss 25 2 4 6 b c d SI 1995 2518 reg 29 VIT20000 VIT30000 VIT40000 De Voil Indirect Tax Service V3 421 For a flowchart outlining the procedure for claiming input tax see the Flowchart procedure for claiming input tax General rule If a business meets the requirements outlined in the What is input tax guidance note and the goods and services purchased acquired or imported by the business will be used in respect of its taxable business activities then the VAT can be recovered in full There are however exceptions to the general rule and they are explained below What items subject are subject to an input tax restriction Not all input tax incurred can be recovered For example certain items of input tax are specifically blocked by legislation or for goods sold using a margin scheme any associated input tax is not recoverable A summary of the items where all or part of the input tax cannot be claimed is below together with a link to the relevant guidance note that provides further information Used goods sold under a second hand margin scheme Overview of margin schemes Goods and services sold as a complete package under the Tour Operators Margin Scheme TOMS Overview of the Tour Operators Margin Scheme TOMS Goods services used for business entertainment Business and staff entertainment Purchase of a car that is available for private use non qualifying car and certain items that are installed in motor cars Buying and selling a car Certain items installed in a new dwelling Buildings and construction building materials Goods and services used in connection with exempt business activities Partial exemption overview

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