Home Computers
Sadly Steve Allen died in July 2011. His wife Leah would like to thank all those who know Steve and helped contribute to his success. She has recommends Steve's clients and anyone who is interested in this article topic to contact Rob McCann from “The Vat people” on (tel) 0161 477 6600 . Please make reference to Steve Allen.
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VATman changes policy on computers supplied to staff in their homes
On 14 August 2007 the VATman issued Revenue & Customs Brief 55/07 notifying
businesses of a change in policy regarding VAT recovery on computers made
available by employers to their staff for use at home. The gist of the Brief is
that, whilst the Home Computers Initiative remained in place, HMRC effectively
disregarded the VAT consequences of any private use but, now that the HCI has
come to an end, HMRC will expect employers to identify private use and account
for VAT accordingly.
This follows withdrawal of the direct tax exemption, introduced in April
1999, which allowed employers to loan computer equipment to their employees tax
free. In January 2004 the Government launched the Home Computer Initiative which
encouraged employers and employees to take advantage of the exemption
The VATman’s policy to allow full VAT recovery without any adjustment for
private use providing there was some business use been withdrawn from 14 August
2007.
Businesses will only be able to claim full VAT recovery without any
requirement to account for VAT on any private use where the provision of a
computer is necessary for the employee to carry out the duties of his
employment. In these circumstances HMRC’s view is that it is unlikely that any
private use will be significant when compared with the business need for
providing the computer in the first place.
Where a business cannot demonstrate that it is necessary to provide an
employee with a computer in order to carry out the duties of his employment then
only a portion of the VAT incurred can be reclaimed. HMRC will accept any method
of apportioning the VAT incurred as long as the result fairly and reasonably
reflects the extent of business use.
Where a business continues to provide a computer under an existing HCI
agreement full VAT recovery can continue until the agreement (normally 3 years)
has expired.
About the Author
Steve Allen is the
Director of VAT Solutions (UK) Ltd, an established independent firm of Chartered
Tax Advisers, formed by Andrew Needham and Steve Allen. Both not only are
respected tax advisers, but have worked for both Customs & Excise and one of the
top four accountancy firms for many years. This mean that their team know both
sides of the equation and are truly experts in this field.
The company has a cross-section of clients from multi-national companies
through to medium-sized and numerous smaller regional firms of accountants and
solicitors. They produce a regular publication 'VAT Voice', which can be
downloaded directly from their website
www.vatsolutions-uk.com.
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Article Published/Sorted/Amended on Scopulus 2007-09-08 15:48:26 in Tax Articles
