Deducting VAT as an expense

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Louisa@AardvarkAccounting replied

6 June 2017, 19:38
Originally posted by Tetris View Post

If a company will use a fixed asset (VAT has been payed for this asset) in an operation that is exempt without the right to deduct, can the company considered payed VAT for this asset as an expense? (For Profit purposes)

I believe it should be able to do so and people tell me it can because company can no longer use this VAT for VAT deduction purposes.

However nobody has actually told me why, does IAS says something about this ?

Thank you very much for your time

I assume you are asking what is claimed as a cost to the company? Based on if you reclaim VAT or not on a purchase.

For example; you have paid £1,000 + VAT for the asset.

If you don't reclaim the £200 VAT on your VAT return, then it will be the full £1,200 shown as a deduction. (perhaps you are on the FRS scheme or not VAT registered).

If however you reclaim the £200 VAT, it is the net amount of £1,000 shown as a deduction.

HTH

Last edited by Louisa@AardvarkAccounting; 6 June 2017, 19:41.
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Tetris started a topic Deducting VAT as an expense

6 June 2017, 18:18
Deducting VAT as an expense

If a company will use a fixed asset (VAT has been payed for this asset) in an operation that is exempt without the right to deduct, can the company considered payed VAT for this asset as an expense? (For Profit purposes)

I believe it should be able to do so and people tell me it can because company can no longer use this VAT for VAT deduction purposes.

However nobody has actually told me why, does IAS says something about this ?

Thank you very much for your time
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