Capital goods scheme
Capital goods are items that are used in the business for a number of years. Input VAT is deducted when the asset is acquired, and the amount of input VAT is dependent on the extent to which that item is used for taxable business purposes. The amount of input VAT deducted is based on the business's partial exemption recoverable percentage. The amount of input VAT must be adjusted for a fixed period of time if the business's partial exemption recovery position changes (ie the amount of taxable use increases or decreases over the adjustment period).
The adjustment period
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