The Value Added Tax Regulations 1995

Attribution of input tax to foreign and specified supplies

103.  —

(1) Input tax incurred by a taxable person in any prescribed accounting period on goods imported or acquired by, or goods or services supplied to, him which are used or to be used by him in whole or in part in making—

(a) supplies outside the United Kingdom which would be taxable supplies if made in the United Kingdom, or

(b) supplies specified in an Order under section 26(2)(c) of the Act,

shall be attributed to taxable supplies to the extent that the goods or services are so used or to be used expressed as a proportion of the whole use or intended use.

(2) Where—

(a) input tax of the description in paragraph (1) above has been incurred on goods or services which are used or to be used in making both—

(i) a supply within item 1 or 6 of Group 5 of Schedule 9 to the Act, and

(ii) any other supply, and

(b) the supply mentioned in sub-paragraph (a)(i) above is incidental to one or more of the taxable person’s business activities,

that input tax shall be attributed to taxable supplies in accordance with paragraph (1) above notwithstanding any provision of any method that the taxable person is required or allowed to use under this Part of these Regulations which purports to have the contrary effect.

(3) For the purpose of attributing to taxable supplies any input tax of the description in paragraph (2) above, it shall be deemed to be the only input tax incurred by the taxable person in the prescribed accounting period concerned.