Input tax ― business, non-business and private use

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note looks at issues around whether expenditure is used for business, private or other non-business purposes in the context of VAT recovery and input tax.

For an overview of input tax more broadly, see the Input tax ― overview guidance note.

For in-depth commentary on the legislation and case law on input tax and business activities, see De Voil Indirect Tax Service V3.405A–V3.410.

Business, non-business and private use ― the basics

A general rule is that it is not possible to recover VAT on costs incurred on non-business activities. There are, however, a number of significant exceptions to this general rule that are summarised towards the end of this guidance note. Only VAT on costs which is used for business purposes can properly be said to be ‘input tax’. VAT which is incurred for either private or non-business purposes is not input tax and cannot be recovered, other than in exceptional circumstances.

HMRC policy regarding whether an activity is in the course or furtherance of a business has

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Trusts and Inheritance Tax

Gifts out of surplus income

Gifts out of surplus incomeA valuable exemption from inheritance tax (IHT) applies to gifts out of surplus income. This exemption applies only to lifetime gifts and is therefore a key part of lifetime planning. The exemption applies to both outright gifts and gifts into trust. Gifts which meet the

14 Jul 2020 11:48 | Produced by Tolley in association with Emma Haley at Boodle Hatfield LLP Read more

Corporation Tax

Premiums on the grant or surrender of a lease

Premiums on the grant or surrender of a leasePremiums on the grant of a lease ― outlineWhen a property investor grants a lease, potentially this could be done on the basis that the tenant pays a premium for the initial grant of the lease, in addition to also paying rent over the term of the lease.

14 Jul 2020 12:58 | Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax Read more

Owner-Managed Businesses

Sales, advertising and marketing

Sales, advertising and marketingExpenditure on sales, advertising and marketing activities may include amounts which are disallowable for the purposes of calculating trading profits. This may be because the expenditure is:•capital in nature (see the Capital vs revenue expenditure guidance note)•not

14 Jul 2020 13:28 | Produced by Tolley Read more

��˾��ҹ��