The Value Added Tax Regulations 1995

Attribution of input tax to taxable supplies U.K.

101.  —

(1) Subject to [F1 regulations 102, 103A, 105A and 106ZA], the amount of input tax which a taxable person shall be entitled to deduct provisionally shall be that amount which is attributable to taxable supplies in accordance with this regulation.

(2) [F2 Subject to paragraph (8) below and regulation 107(1)(g)(ii),] in respect of each prescribed accounting period—

(a) goods imported or acquired by and, F3 ... goods or services supplied to, the taxable person in the period shall be identified,

(b) there shall be attributed to taxable supplies the whole of the input tax on such of those goods or services as are used or to be used by him exclusively in making taxable supplies,

(c) no part of the input tax on such of those goods or services as are used or to be used by him exclusively in making exempt supplies, or in carrying on any activity other than the making of taxable supplies, shall be attributed to taxable supplies, F4 ...

(d) [F5 where a taxable person does not have an immediately preceding longer period and subject to subparagraph (e) below,] there shall be attributed to taxable supplies such proportion of the [F6 residual input tax] as bears the same ratio to the total of such input tax as the value of taxable supplies made by him bears to the value of all supplies made by him in the period.

[F7 (e) the attribution required by subparagraph (d) above may be made on the basis of the extent to which the goods or services are used or to be used by him in making taxable supplies,

(f) where a taxable person has an immediately preceding longer period and subject to subparagraph (g) below, his residual input tax shall be attributed to taxable supplies by reference to the percentage recovery rate for that immediately preceding longer period, and

(g) the attribution required by subparagraph (f) above may be made using the calculation specified in subparagraph (d) above provided that that calculation is used for all the prescribed accounting periods which fall within any longer period applicable to a taxable person.]

(3) In calculating the proportion under paragraph (2)(d) [F8 or (g)] above, there shall be excluded—

(a) any sum receivable by the taxable person in respect of any supply of capital goods used by him for the purposes of his business,

(b) any sum receivable by the taxable person in respect of any of the following descriptions of supplies made by him, where such supplies are incidental to one or more of his business activities—

[F9 (i) any supply of a description falling within Group 5 of Schedule 9 to the Act,,

(ii) any other financial transaction, and

(iii) any real estate transaction,]

(c) that part of the value of any supply of goods on which output tax is not chargeable by virtue of any order made by the Treasury under section 25(7) of the Act unless the taxable person has imported, acquired or been supplied with the goods for the purpose of selling them, F10 ...

(d) the value of any supply which, under or by virtue of any provision of the Act, the taxable person makes to himself, F11 ...

[F12 (e) supplies of a description falling within paragraph (8) below] [F13 , and

(f) the value of supplies made from an establishment situated outside the United Kingdom,]

[F14 (g) where a removal of goods is treated as a taxable supply by virtue of [F15 paragraph 31A(1)] of Schedule 9ZB to the Act, the value of that supply.]

(4) The ratio calculated for the purpose of paragraph (2)(d) [F16 , (e) or (g)] above shall be expressed as a percentage and, if that percentage is not a whole number, it shall be rounded up [F17 as specified in paragraph (5) below].

F18 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F19 (5) The percentage shall be rounded up—

(a) where in any prescribed accounting period or longer period which is applied the amount of input tax which is available for attribution under paragraph 2(d) [F20 , (e) or (g)] above prior to any such attribution being made does not amount to more than £400,000 per month on average, to the next whole number, and

(b) in any other case, to two decimal places.]

[F21 (6) For the purposes of this regulation, a “real estate transaction” includes any grant, assignment (including any transfer, disposition or sale), surrender or reverse surrender of any interest in, right over or licence to occupy land.]

[F22 (7) In this regulation “taxable supplies” include supplies of a description falling within regulation 103.

(8) Input tax incurred on goods or services acquired by or supplied to a taxable person which are used or to be used by him in whole or in part in making—

(a) supplies falling within either item 1 or item 6 of Group 5 of Schedule 9 to the Act; F23 ...

F23 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

shall, whether the supply in question is made within or outside the United Kingdom, be attributed to taxable supplies on the basis of the extent to which the goods or services are used or to be used by him in making taxable supplies.

(9) For the purposes of this regulation in relation to a taxable person—

(a) “immediately preceding longer period” means the longer period applicable to him which ends immediately before the longer period in which the prescribed accounting period in respect of which he is making the attribution required by paragraph (2)(d) to (g) above falls;

(b) “percentage recovery rate” means the amount of relevant residual input tax which he was entitled to attribute to taxable supplies under regulation 107(1)(a) to (d), expressed as a percentage of the total amount of the residual input tax which fell to be so attributed and rounded up in accordance with paragraphs (4) and (5) above;

(c) “relevant residual input tax” means all residual input tax other than that which falls to be attributed under paragraph (8) above.

(10) In this regulation “residual input tax” means input tax incurred by a taxable person on goods or services which are used or to be used by him in making both taxable and exempt supplies.]

Textual Amendments

F1 Words in reg. 101(1) substituted (1.4.2010) by The Value Added Tax (Amendment) Regulations 2010 (S.I. 2010/559), regs. 1, 4

F2 Words in reg. 101(2) inserted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(b) (with reg. 1(2))

F3 Words in reg. 101(2)(a) omitted (28.4.1996) by virtue of The Value Added Tax (Amendment) (No. 3) Regulations 1996 (S.I. 1996/1250), regs. 1(1)(2), 14(a)

F4 Word in reg. 101(2)(c) omitted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by virtue of The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(c) (with reg. 1(2))

F5 Words in reg. 101(2)(d) inserted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(d)(i) (with reg. 1(2))

F6 Words in reg. 101(2)(d) substituted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(d)(ii) (with reg. 1(2))

F7 Reg. 101(2)(e)-(g) inserted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(e) (with reg. 1(2))

F8 Words in reg. 101(3) inserted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(f) (with reg. 1(2))

F9 Reg. 101(3)(b)(i)-(iii) substituted for reg. 101(3)(b)(i)-(v) (1.4.2007) by The Value Added Tax (Amendment) (No.2) Regulations 2007 (S.I. 2007/768), regs. 1, 7(a)

F10 Word in reg. 101(3)(c) omitted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by virtue of The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(g) (with reg. 1(2))

F11 Word in reg. 101(3) omitted (with effect in accordance with reg. 2(1)(a) of the amending S.I.) by virtue of The Value Added Tax (Amendment) Regulations 2015 (S.I. 2015/1978), regs. 1, 4(a)(i)

F12 Reg. 101(3)(e) inserted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(i) (with reg. 1(2))

F13 Reg. 101(3)(f) and word inserted (with effect in accordance with reg. 2(1)(a) of the amending S.I.) by The Value Added Tax (Amendment) Regulations 2015 (S.I. 2015/1978), regs. 1, 4(a)(ii)

F14 Reg. 101(3)(g) inserted (31.12.2020) by The Value Added Tax (Miscellaneous Amendments, Northern Ireland Protocol and Savings and Transitional Provisions) (EU Exit) Regulations 2020 (S.I. 2020/1545), regs. 1, 56 (with regs. 109-131); S.I. 2020/1641, reg. 2, Sch.

F15 Words in reg. 101(3)(g) substituted (1.8.2021) by The Value Added Tax (Amendment) (EU Exit) Regulations 2021 (S.I. 2021/715), regs. 1, 36

F16 Words in reg. 101(4) inserted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(j) (with reg. 1(2))

F17 Words in reg. 101(4) substituted (1.4.2005) by The Value Added Tax (Amendment) Regulations 2005 (S.I. 2005/762), regs. 1(1), 3(1) (with reg. 1(2))

F18 Reg. 101(5) omitted (28.4.1996) by virtue of The Value Added Tax (Amendment) (No. 3) Regulations 1996 (S.I. 1996/1250), regs. 1(1)(2), 14(b)

F19 Reg. 101(5) added (1.4.2005) by The Value Added Tax (Amendment) Regulations 2005 (S.I. 2005/762), regs. 1(1), 3(2) (with reg. 1(2))

F20 Words in reg. 101(5) inserted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(k) (with reg. 1(2))

F21 Reg. 101(6) inserted (1.4.2007) by The Value Added Tax (Amendment) (No.2) Regulations 2007 (S.I. 2007/768), regs. 1, 7(b)

F22 Reg. 101(7)-(10) inserted (1.4.2009 in relation to input tax incurred by a taxable person on goods imported or acquired by, or goods or services supplied to, him on or after that date) by The Value Added Tax (Amendment) (No. 2) Regulations 2009 (S.I. 2009/820), regs. 1(1), 4(l) (with reg. 1(2))

F23 Reg. 101(8)(b) and word omitted (with effect in accordance with reg. 2(1)(a) of the amending S.I.) by virtue of The Value Added Tax (Amendment) Regulations 2015 (S.I. 2015/1978), regs. 1, 4(b)

Commencement Information

I1 Reg. 101 in force at 20.10.1995, see reg. 1