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HMRC’s approach to input tax on overheads

31 May 2017 / Neil Warren
Issue: 4601 / Categories: Comment & Analysis , Admin

On the right track?


  • Must there be a ‘direct and immediate link’ between an input and an output?
  • HMRC has been defeated in three recent cases when it claimed there was no link.
  • The origins of the ‘direct and immediate link’ phrase.
  • In Sveda the key fact was that the expenditure of the path related to a ‘taxable economic activity’.
  • When considering input tax allowability the important distinction is between purpose and benefit.

Readers of Taxation who are ever faced with a challenge from HMRC about an input tax claim on overheads should be alert to one word that might be very useful. That word is ‘Sveda’ which sounds rather like the title of a Communist Party newspaper from the days of the Soviet Union.

In fact it is the name of...

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