Recovering input VAT

In this lesson

1. 0:00 Recovering input VAT overview
2. 0:40 Entertainment and car VAT rules
3. 2:00 Lease costs and motor expenses
4. 2:26 Fuel for private use accounting
5. 4:33 Bad debt relief and timing
6. 6:08 Worked example: home office expenses
7. 8:11 Worked example: car and bad debts
8. 10:35 Question approach and best practice

About this lesson

You'll discover why certain business expenses—like entertaining UK customers or purchasing cars with private use—are treated differently, and how to correctly apportion VAT when goods and services are used partly for business and partly for private purposes. The lesson covers the key restrictions on input VAT recovery: entertainment costs (UK customers only), motor vehicles and lease costs, fuel scale charges for private use, and bad debt relief procedures. You'll work through the specific rules for each category, including the critical timing requirement that bad debts must be six months old from the payment due date, not the invoice date. The lesson emphasises the importance of careful calculation, particularly when figures are stated inclusive or exclusive of VAT. Two worked examples demonstrate how to apply these rules in practice. The first shows how to apportion heating costs for a home-based business and correctly disallow UK customer entertaining. The second illustrates car purchase VAT treatment and bad debt recovery calculations. These examples highlight common exam pitfalls, such as the fixed 50% disallowance on leased cars regardless of actual business use percentage. This content is essential for ACCA Taxation (TX) and Advanced Taxation (ATX) papers, where VAT recovery rules are regularly tested in both calculation and narrative questions. Understanding these restrictions will help you handle scenario-based questions confidently and avoid losing marks on technical details.

Duration: 11m