VAT on fixed assets

wernhamtc Registered Posts: 4
Hi Guys

Have a question regarding VAT on fixed assets - the business is part of a complicated group structure and this particular subsidiary has a recovery rate of 99%, however when consolidated with the group for the group VAT return the recovery rate drops considerably below 50%. Due to the group structure and the way VAT is accounted for, input VAT is expensed on the I&E in the period the expenditure is incurred, however output VAT is posted to a control account and then an adjustment is posted each quarter to recover output VAT when the return is completed.

Equipment which is capitalised at the moment is capitalised at the gross value (due to VAT being expensed so assets are capitalised at gross) however I think that the assets should possibly be capitalised at the net value, and the VAT expensed to the I&E to be included in the VAT return as it is fully recoverable?

There seems to be a possibility that we are not fully recovering input VAT due to this process. Anybody have any thoughts on this?



  • Atahar01
    Atahar01 Registered Posts: 14
    It depends on which vat scheme you're in. If you are in the flat rate scheme then all your figures would go in as gross and any vat due for payment would also go in the p&L. However if you are in the standard rated scheme then all the figures should be net of vat.
  • Neillaw
    Neillaw Registered Posts: 307 Dedicated contributor 🦉
    Your part of a group structure which may mean that it may not be good for you but when looking at the group as a whole it may actually be a vat saving. Other members of the group may be the ones that benefit from this arrangement but not you.
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