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HMRC internal manual

VAT Input Tax

VAT Input Tax basics: the basic right to deduct principles

A business that is registered for VAT can claim back VAT incurred on goods or services that form a cost component of its taxable supplies.

A business will only have incurred input tax if all the following conditions are met:

  • there has actually been a supply to it of goods or services;
  • the supply took place in the UK;
  • the supply was taxable at a positive rate;
  • the supply was made to the person claiming the deduction;
  • the recipient intends to use the goods or services for the purposes of their business;
  • the recipient was a taxable person at the time the tax was incurred or the tax was eligible for relief under regulation 111; and
  • the supplier was a taxable person at the time of the supply.

A taxable person is someone who is registered or who is required to be registered for VAT.

Where these conditions are met input tax can be recovered if acceptable (VIT31000) or alternative (VIT31200) evidence is available.