Commentary

V7.435 Input tax—introduction

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.435 Input tax—introduction

Part V7 Tax planning | Commentary

Input tax issues

V7.435 Input tax—introduction

The basic rule for reclaiming input tax is simple: if the VAT on an expense relates to taxable supplies, then input tax can usually be reclaimed; if it relates to non-business supplies (eg private expenditure) or exempt supplies, then no input tax can be reclaimed.

There are a couple of notable exceptions when input tax cannot be reclaimed:

  1.  

    •     business entertaining is a non-deductible expense, unless the expenditure relates to the entertaining of staff or overseas customers

  2.  

    •     input VAT incurred on the purchase of motor cars is also non-deductible in most cases –

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