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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
, see all updates

Value Added Tax: inter-relation with earnings and expenses: VAT and pecuniary liability payments

If an employer meets the pecuniary liability of an employee (see EIM00580) and that liability includes an element of VAT, the amount taxable as employment income should include the VAT whether or not the employer may later recover all or part of it by set-off or repayment from Customs and Excise.