VAT – what you can and cannot reclaim
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.


About Us

Joe has over 30 years experience in Accountancy and qualified in 1996 with the Association of Chartered Certified Accountants (ACCA). He has subsequently become a Fellow of the ACCA.

Find out more...

Legal

Regulated for a range of investment business activities by the Association of Chartered Certified Accountants Registered as auditors and regulated for a range of investment business activities in the United Kingdom by the Association of Chartered Certified Accountants © 2021 JNB Accountancy Limited t/a Nathans. All rights reserved Registered address: Unit 3B Trident Business Centre, Amy Johnson Way, Blackpool, FY4 2RP Registered in England, company number: 09335227.

Contact Us

Unit 3b Trident Business Centre
Amy Johnson Way
Blackpool
FY4 2RP

Tel: 01253 298859

Email: joe@nathansaccountants.co.uk

 

Membership

      

  

JUMP TO TOP