Input tax claims on costs relevant to sales that are outside the scope of VAT

Key points

• Many HMRC officers appear not to understand the rules about claiming input tax on costs relevant to sales that are outside the scope of VAT.
• If a UK business sells goods or services abroad that would be VATable if supplied in the UK the business can register for VAT and claim input tax on its expenses.
• HMRC VAT notices and manuals can be helpful in reaching the right decision.

Outside the scope with recovery. What does that phrase mean in relation to the nation’s favourite tax? I will fully explain its meaning in this article but that is not the main reason why I am banging away on my typewriter about this very important topic. The reason is because I have recently dealt with two HMRC enquiries about repayment VAT returns where the officers didn’t know what it meant either. They both jumped to the wrong...