Claiming input tax

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Claiming input tax
  • General rule
  • What items subject are subject to an input tax restriction?
  • Can input tax be claimed businesses that have not started to trade (intending trader)?
  • Procedure for recovering input tax
  • Group registrations
  • Transfer of a business as a going concern (TOGC)
  • Late claims
  • Early claims
  • Estimated claims for input tax
  • More...

Claiming input tax

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

This guidance note provides an overview of when input tax can be reclaimed and should be read in conjunction with the What is input tax and other notes in the ‘Claiming input tax’ subtopic.

See our interactive flowchart outlining the procedure for claiming input tax. Alternatively, for a static pdf version, see the Flowchart ― procedure for claiming input tax.

General rule

If a business meets the requirements outlined in the What is input tax guidance note and the goods and services purchased, acquired or imported by the business will be used in respect of its taxable business activities, then the VAT can be recovered in full.

There are, however, exceptions to the general rule and they are explained below.

What items subject are subject to an input tax restriction?

Not all input tax incurred can be recovered. For example, certain items of input tax are specifically blocked by legislation or for goods sold using a ‘margin scheme’ any associated input tax is not recoverable. A summary of the items where all or part of the input tax cannot be claimed is below together with a link to the relevant guidance note that provides further information:

Used goods sold under a secondhand margin schemeOverview of margin schemes
Goods and services sold as a complete package under the Tour Operators Margin Scheme (TOMS)Tour Operators Margin Scheme (TOMS) ― overview

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