My client has just had to register for VAT.
About 12 months ago they leased some equipment for use in the business on a four year lease.
Can VAT be re-claimed on all the previous 12 monthly payments to the leasing company, or are they limited to 6 months only?
Thanks for replies.
Replies (1)
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Leasing = a service so 6 months limit
The differentiation between goods and services is important here.
In my opinion the supply by the finance company is a service - hire of equipment (like rent of premises).
Therefore a service, therefore 6 months limit to pre-registration input tax claim in this case.
Would be different if it were a case of no VAT charged on instalments and all VAT charged at outset of agreement which indicates the supply of goods on finance (where 4 year time limit would apply).