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Fair recovery
Key points
- The capital goods scheme seeks to ensure businesses recover a fair amount of VAT on expensive assets used over a long time.
- Adjustments may be required if the ‘use’ of a capital item varies over time.
- A sales adjustment may be necessary when a capital item is sold during its capital goods scheme adjustment period.
The capital goods scheme (CGS) crops up regularly in Association of Taxation Technicians paper 6 which relates to VAT. From a question-setting point of view it is an important and versatile topic to test. For example the CGS could feature as part of a wider long question about land and property or partial exemption. It could also be tested in the context of a question about a transfer of a going concern. Equally it might be the principal focus of a question in its own right.
This article aims to give ATT – and...
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