Vehicle Control Services Ltd appealed against the First-Tier Tribunals decision, which stated that it is necessary to apportion input VAT on general overheads when supplies that are outside the scope of UK VAT are made with input VAT attributed to these supplies being irrecoverable. In this instance, in addition to making taxable supplies of parking services, the taxpayer issued parking charge notices to motorists and the income generated was determined to be outside the scope of UK VAT. Under UK VAT legislation, input is only recoverable to the extent it relates to the provision of onward taxable supplies and when a business makes supplies which are not liable to UK VAT, input VAT incurred must be attributed with respect to supplies made in order to determine the amount that is recoverable. In this case the decision of the First-Tier Tribunal was maintained and thus it was determined that the taxpayer was obliged to restrict VAT recovery in order to reflect the non-VATable income that it generated following the issue of parking charge notices. In order to determine whether your business will be required to make apportionments of this nature, and if so, the method that should be applied to these calculations, please call our free VAT helpline today.
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