Input tax ― conditions for recovering VAT

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note looks at the conditions that must be met in order for a business to recover VAT on costs.

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 in this area, see De Voil Indirect Tax Service V3.401.

Basics of VAT recovery

For VAT to be recovered by a business (or other VAT registered person), it must:

•
have incurred ‘input tax’ in the first place
•
be entitled to recover that input tax

VATA 1994, ss 24, 26; VIT12100

Whether input tax has been incurred

For input tax to have been ‘incurred’ by a business, the following conditions must be satisfied:

•
the VAT must have been incurred for business purposes
•
the VAT must have been properly charged
•
the business must be the recipient of the supply

VATA 1994, s 24(1); VIT10100

Input tax in this context can be VAT incurred on UK supplies

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