Reclaiming input tax on miscellaneous expenses

By Tolley
VAT_tax_img2

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

  • Reclaiming input tax on miscellaneous expenses
  • Sporting recreational and sponsorship
  • Insurance claims, legal and accountancy fees
  • Domestic accommodation
  • Farmhouses
  • Selling domestic property
  • Timeshare accommodation
  • Holding companies
  • Clubs and franchised catering
  • Self-employed contractors
  • Leases to named individuals
  • Importing goods for private purposes

This guidance note provides details on the input VAT treatment of various types of miscellaneous business expenditure.

VIT40000; De Voil Indirect Tax Service V3.410 (subscription sensitive)
Sporting recreational and sponsorship
Sponsorship and advertising, etc

It is common for business to promote their business by sponsoring a sporting event or participant in a sporting event. If it is clear that the sponsorship has been undertaken solely with a view to promoting the business, any input tax incurred can be recovered. However, if the person operating the business has a personal interest in the sport or recreational event, it will be necessary for the business to provide satisfactory evidence to HMRC that the sponsorship has been provided for legitimate business purposes.

HMRC cannot disallow the input tax just because the person operating the business has a personal interest in activity, but they can disallow the VAT if they are not satisfied that the business has directly benefited from the sponsorship. There needs to be a clear nexus between the business and the expenditure in order for VAT to be recoverable on costs incurred.

The attached checklist, which is based on the types of questions asked by HMRC, can be used by a business or its adviser to establish whether the business should be in a position to recover VAT incurred on costs associated with the provision of sport and recreational activities:

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Please see the Sponsorship guidance note for more information on the VAT treatment of sponsorship.

Insurance claims, legal and accountancy fees
Insurance claims

Insurance companies are unable to recover VAT incurred on the cost of repairing and replacing items for claims made under an insurance policy, as the supply is made to the policyholder and not the insurance company. However, a VAT

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