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HMRC internal manual

VAT Margin Schemes

Basic principles: What input tax can be reclaimed?

 

Goods purchased on a tax invoice cannot be included in the margin schemes. Input tax can be reclaimed on business overheads, repairs, parts or accessories, etc, subject to the normal rules; but these costs must not be added to the purchase price of goods sold under the margin schemes.

The legal provision which excludes input tax from being recovered on goods bought under the margin schemes is Article 4 of the VAT (Input Tax) Order 1992(SI 1992/3222).