Reclaiming input tax on miscellaneous expenses

Produced by Tolley

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

  • Reclaiming input tax on miscellaneous expenses
  • Sporting recreational and sponsorship
  • Insurance claims, legal and accountancy fees
  • Insurance claims
  • Legal and accountancy fees
  • Domestic accommodation (home office)
  • Mixed use by sole proprietors and partners
  • Employee accommodation
  • Hotels ― supply of food / accommodation to employees
  • Company director accommodation
  • More...

Reclaiming input tax on miscellaneous expenses

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 details on the input VAT treatment of various types of miscellaneous business expenditure.

Sporting recreational and sponsorship

See the Supply and consideration ― donations and sponsorship guidance note.

Insurance claims, legal and accountancy fees

Insurance claims

Insurance companies are unable to recover VAT incurred on the cost of repairing and replacing items for claims made under an insurance policy, as the supply is made to the policyholder and not the insurance company. However, a VAT registered policyholder may treat any VAT incurred on the supply as input tax and if the policyholder is VAT registered, so the insurer will normally only pay the policyholder compensation exclusive of VAT. The invoice is normally addressed to the business and they will be required pay the VAT direct to the supplier. The insurance company will pay the net amount due directly.

If the insurance claim relates to items that are used for business and non-business purposes, it is important to ensure that any VAT incurred is apportioned accordingly. If the insurance claim relates to a car, all of the VAT incurred on any repairs will normally be recoverable in full even if the car is available for private / non-business use. See the Business and non-business and Lennartz accounting and private use of assets guidance notes for more information.

The business will not be able to recover all or part of the VAT incurred on the insurance claim, if the goods will be used for making wholly or

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