Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

VAT treatment of goods bought by a business

12 September 2018 / Neil Warren
Issue: 4663 / Categories: Comment & Analysis
istock-820868404_1_fmt_0

Buying dilemmas

KEY POINTS

  • VAT on equipment that relates to both taxable and exempt sales residual input tax for partial exemption purposes.
  • An annual adjustment calculation may be required for a partial exemption calculation.
  • The annual adjustment can make a significant difference if income fluctuates.
  • Apportionment or the Lennartz mechanism may be relevant if there is private use.
  • If only a percentage of VAT was claimed on purchase this will also apply on sale.

When I first started advising accountants about VAT more than 20 years ago I often had to interrupt them when they said that ‘exempt and zero rated mean the same thing’. They do not but it is also important to understand the difference between non-business private and exempt use in relation to both buying and...

If you or your firm subscribes to Taxation.co.uk, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.

FIVE WAYS TO MAKE ACCOUNTS PRODUCTION AND TAX EASIER.
Download the exclusive Xero
free report here.

New queries
Please email any questions you might have
to: taxation@lexisnexis.co.uk.

back to top icon