I have just made and agreed a claim for pre-registration input tax for a client who has just registered for VAT. For the size of his business, it is a significant figure. What I cannot seem to confirm is whether this "income" is income for tax purposes. Logically, if I reclaim the 20% VAT on my mobile for the last six months, then this reduces the P&L charge (ie it is taxable). Also logically, if I reclaim VAT on an asset of the business, it's cost has reduced - but I have previously claimed annual investment allowance of 100% in a previous year. I have currently credited the total amount of the input tax claimed to P&L, but is it taxable ? I cannot find where it is even though logic tells me it should be.
Thanks as always.