Input VAT: What Is Recoverable and What Isn’t

What Is Input VAT
Input VAT is the tax paid on business purchases and expenses. If you’re VAT-registered, you can generally reclaim it to reduce your VAT liability or increase your refund.
Reclaimable vs. Non-Reclaimable VAT
You can reclaim VAT on purchases used for taxable business activities, like supplies or equipment. You cannot reclaim VAT on items used for exempt activities or private/business entertainment.
Special Rules and Mixed Use
For items used for both business and personal purposes, only the business portion of VAT is recoverable. Accurate apportionment and records are essential for compliance and audit readiness.
Common Restrictions and Exceptions
VAT on motor cars, customer entertainment, and private purchases is generally non-recoverable. Staff entertainment may be claimed in limited cases like annual events under £150 per head.
Documentation and Timing
You need valid VAT invoices and import documents to reclaim VAT. Claims are usually made when the invoice is received, except under the cash accounting scheme, which depends on payment.