Search news archive

0208 330 7711 591 London Road, Cheam, Sutton, SM3 9AG

VAT – what you can and cannot reclaim

Source: HM Revenue & Customs | | 15/07/2021

For most fully taxable businesses, VAT can be reclaimed on goods and services used in the business. This means that businesses must consider where there is personal or private use of goods or services bought for the business and can usually only reclaim the business proportion of the VAT.

For example, VAT is recoverable on all the costs of mobile phones provided to employees where no personal use is allowed. Where businesses allow private calls to be made at no charge the VAT recovery must be apportioned on a fair and reasonable basis. Where employees pay for the private use of their phones the business is allowed to reclaim the input tax in full provided an output tax charge is accounted for in respect of private use.

You cannot reclaim VAT for:

  • anything that is only for private use;
  • goods and services your business uses to make VAT-exempt supplies;
  • business entertainment costs;
  • goods sold to you under one of the VAT second-hand margin schemes;
  • business assets that are transferred to you as a going concern.

There are different rules for a business that incurs expenditure on taxable and exempt business activities. These businesses are partially exempt for VAT purposes and are required to make an apportionment between their activities using a 'partial exemption method' to calculate how much input tax is recoverable.

 

Latest News

  • Reforming statutory sick pay

    29/07/2021 - More...

    Following its summer 2019 consultation entitled “Health is everyone’s business: proposals for reducing ill health-related job loss”, the government has now published

  • SEISS – more red tape

    29/07/2021 - More...

    Government support to the self-employed through the Self-Employment Income Support Scheme (SEISS) is due to end on 30 September 2021. A fifth and final grant covering the period

  • Tax-free gains on gifts to spouse or charity

    29/07/2021 - More...

    In most cases, there is no Capital Gains Tax (CGT) to be paid on the transfer of assets to a spouse or civil partner. There is, however, still a disposal that has taken place for

Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter
» Login