What is input tax?

Produced by a Tolley Value Added Tax expert
Value Added Tax
Guidance

What is input tax?

Produced by a Tolley Value Added Tax expert
Value Added Tax
Guidance
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This guidance note provides an overview of what conditions need to be met before a business is entitled to treat VAT incurred as input tax. This note should be read in conjunction with the other notes in the ‘Claiming input tax’ subtopic.

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

The term ‘input tax’ includes the following:

  1. •

    VAT incurred on goods and services that have been supplied to a taxable person

  2. •

    for transactions prior to 1 January 2021, VAT incurred on the acquisition of goods from another EU member state (acquisition tax)

  3. •

    VAT paid or payable on imported goods (import VAT)

VATA 1994, s 24(1); SI 1995/2518, reg 29(1)

The VAT must be used, or intended to be used, for the purposes of the business carried or intended to be carried on by the person receiving the supply.

VAT paid on the above only becomes ‘input tax’ if it meets the conditions outlined below.

What conditions

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  • 14 Jul 2020 14:00

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