Claim VAT on costs when sales are outside scope

Can client claim back UK VAT on their expenses when their sales are all outside the scope of UK VAT?

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Can client claim back UK VAT on their expenses when their sales are all outside the scope of UK VAT?

UK company sells IT software engineer services to US based businesses. We are happy that the services they provide are outside the scope of UK VAT the question we have is; can the company register for UK VAT and claim back UK VAT on it's costs and expenses even though all of it's services/sales are outside the scope of UK VAT?

I know the answer for a company providing exempt services and the answer for a company providing zero rated services but I can not find the answer for a company providing services that are outside the scope.

Thank you for your help.

Replies (4)

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By clark.hall
29th Jul 2019 17:07

Yes you can. I can’t lay hand on refs right now

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By spidersong
30th Jul 2019 08:49

The reference is VAT Act 1994 S26:
(edited a bit… for brevity)
"26 Input tax allowable ....
(1)The amount of input tax for which a taxable person is entitled to credit at the end of any period shall be so much of the input tax as is ...attributable to supplies within subsection (2) below.
(2)(a)taxable supplies;
(b)supplies outside the United Kingdom which would be taxable supplies if made in the United Kingdom"

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By Archie-Bald
30th Jul 2019 09:05

Thank you clark.hall and Spidersong - really appreciate you taking the time.

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Replying to Archie-Bald:
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By Justin Bryant
30th Jul 2019 11:01

Yes; you will generally find a 100% inverse correlation between useful/interesting threads and "Tax Dragon", "Wilson Philips" "Whatever PNL now calls herself" etc.

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