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.