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VAT - Partial Exemption - Purchase of equipment

VAT - Partial Exemption - Purchase of equipment

Please could I have some advice /second opinion.   A partially exempt client has purchased some equipment.  The value of the purchase is below the capital goods scheme thresholds.      Do I  allocate the VAT to the normal taxable, exempt and residual categories  depending on how the equipment is used.   i.e if it is used only for generating taxable sales can all of the input VAT be claimed, whereas if it was only used in relation to exempt sales no input VAT would be recovable.    Or is there another treatment?  

 if the equipment is subsequently sold, how is the sale treated in terms of what VAT has to be paid to HMRC.      

I have tried reading the VAT notices, but have managed to get myself somewhat confused.   Any help is much appreciated.



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By Ruddles
09th Nov 2017 13:58

Subject to the resident VAT expert(s) putting me straight, my understanding is that you treat the input VAT based on intended use of the asset at the time of acquisition.

Should any of the input VAT be recoverable, output VAT is chargeable on the full amount of the sale proceeds.

Thanks (1)
By Ruddles
to fawltybasil2575
09th Nov 2017 16:55

Worth pointing out that the change of intention rules apply only where the change of intention occurs before the original intention is fulfilled.

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to Ruddles
09th Nov 2017 17:14

Worth mentioning too the annual adjustment to the PE calculation!

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By jannerD
10th Nov 2017 13:46

Thank you for all the helpful comments, it's much appreciated.

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