Commentary

V7.436 Input tax—the business argument

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.436 Input tax—the business argument

Part V7 Tax planning | Commentary

V7.436 Input tax—the business argument

A key method to adopt when considering input tax deduction on an expense is to ask the question: why was the expenditure incurred? Is there a clear business link? Was the expenditure made specifically to benefit the business? Or was it primarily made for private purposes – but the owner is trying to justify a business argument? See Example 1.

Example 1

Mr Jones is a sole trader (management consultant) and has claimed input tax on three expenses.

  1.  

    (a)     He has renewed his golf club membership for £4,000 plus VAT. He has reclaimed £700 input tax because

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