V3.460 Attribution of input tax

Partial exemption—introduction

V3.460 Attribution of input tax

Once the extent to which the amount of VAT incurred by a person as input tax is established, and any amounts of input tax which are excluded from credit1 have been identified, it is then necessary to determine the extent to which that input tax is recoverable.

At the end of any prescribed accounting period, taxable persons are to credit for so much of their input tax for that period as is allowable. They may deduct the amount of that credit from any output tax due from them2.

Attribution of input tax—UK legislation

Under VATA 1994, input tax is allowable to the extent that it is attributable to the following supplies made by the taxable person in the course or furtherance of their business3:

  1.  

    (1)     taxable supplies

  2.  

    (2)     supplies outside the UK which would be taxable supplies if made in the UK

  3.  

    (3)     any other supplies outside the UK and such exempt supplies that the Treasury specifies by order, namely4:

  4.  
    1.  

      (a)     services within the following descriptions which are exempt from tax or would have been exempt if made in the UK, by virtue of VATA 1994, Sch 9, Group 2 (insurance) or Group 5 (finance), items 1–6 and 8, that is services:

    2.  
      1.  

        (i)     supplied to a person who belongs5 outside the UK

      2.  

        (ii)     directly linked to the export of goods to a place outside the UK, or

      3.  

        (iii)     consisting of intermediary services6 in relation to any transaction within (i) or (ii), and

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial