The Value Added Tax Regulations 1995

Attribution of input tax to taxable supplies U.K.

101.  —

(1) Subject to regulation 102 [F1 and 103B], 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) In respect of each prescribed accounting period—

(a) goods imported or acquired by and, F2 ... 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, and

(d) there shall be attributed to taxable supplies such proportion of the input tax on such of those goods or services as are used or to be used by him in making both taxable and exempt supplies 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.

(3) In calculating the proportion under paragraph (2)(d) 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—

[F3 (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, and

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

(4) The ratio calculated for the purpose of paragraph (2)(d) above shall be expressed as a percentage and, if that percentage is not a whole number, it shall be rounded up [F4 as specified in paragraph (5) below].

F5 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F6 (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) 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.]

[F7 (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.]

Textual Amendments

F1 Words in reg. 101(1) inserted (3.12.2004) by The Value Added Tax (Amendment) (No. 4) Regulations 2004 (S.I. 2004/3140), regs. 2(3), 10

F2 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)

F3 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)

F4 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))

F5 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)

F6 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))

F7 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)

Commencement Information

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