Commentary

V7.444 Supply must be made to the business seeking to claim input tax

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.444 Supply must be made to the business seeking to claim input tax

Part V7 Tax planning | Commentary

V7.444 Supply must be made to the business seeking to claim input tax

Imagine that Company A and Company B are both VAT registered and connected to each other (common ownership). Company B is partly exempt so cannot fully reclaim input tax on its VAT returns – there is no similar problem for Company A. The directors therefore decide that all expenses incurred by Company B will be invoiced to and paid for by Company A so that the latter can reclaim input tax on the expenditure. Is this allowed?

The key rule is that input tax can only be claimed

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