Claiming input tax

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

  • Claiming input tax
  • The basic rule
  • Supplies must be made to the business claiming input tax
  • VAT must be levied at the relevant rate
  • Exceptions to the basic rule
  • 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

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.

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 (subscription sensitive)

For a flowchart outlining the procedure for claiming input tax, see the Flowchart – procedure for claiming input tax.

The basic rule

The basic rule for reclaiming input tax is laid down in the Value Added Tax (General) Regulations 1995, SI 1995/2518, reg 29(1) which states:

“S29 (1) Subject to paras (1A) and (2) below and save as the Commissioners may otherwise allow or direct either generally or specifically, a person claiming deduction of input tax under section 25(2) of the Act shall do so on the return made by him for the prescribed accounting period in which the VAT became chargeable.

Subject to paragraph (1B) the Commissioners shall not allow or direct a person to make any claim for deduction of input tax in terms such that the deduction would fall to be claimed more than 4 years after the date by which the return for the first prescribed accounting period in which he was entitled to claim that input tax in accordance with paragraph (1) above is required to be made.

(1B) The Commissioners shall not allow or direct a person to make any claim for deduction of input tax where the return for the first prescribed accounting period in which the person was entitled to claim that input tax in accordance with paragraph (1) above was required to be made on or before 31st March 2006.”

Supplies must be made to the business claiming input tax

In order for input tax to be claimed the following conditions must be satisfied:

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