We are an insurance Managing General Agent supplying worldwide and as such we are VAT registered and reclaim input VAT under the partial exemption rules. This is fine however in the last quarter we received a large rebate connected to a photocopier contract renewal that included VAT. On that basis, do I have to declare all of the output VAT applicable on the rebate and offset it against the input VAT claim or will this also be subject to the same proportion applied to the inputs?
Thank you
Replies (2)
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You're overthinking this one. In effect the rebate is because you were 'overcharged' by your supplier. So the VAT is a negative input tax and is subject to the same restrictions as your normal recovery.
I agre with Paul
As the rebate is a refund of the photocopier expense, the rebate should be treated like a purchase credit note reducing the input tax rather than increasing the output tax.
The reduced input tax then goes into the partial exemption calculation.