Value Added Tax Act 1994 section 24

Input tax and output tax

Section 24 defines the fundamental concepts of input tax and output tax, explains how VAT must be apportioned between business and non-business use, and sets out the regulation-making powers that govern how input tax is evidenced and claimed.

• Input tax is the VAT a taxable person incurs on goods, services or imports used for business purposes; output tax is the VAT charged on supplies the taxable person makes.
• Where goods or services are used partly for business and partly for non-business purposes, the VAT must be apportioned — only the business portion counts as input tax, while the non-business portion can only be recovered to the extent regulations allow.
• Certain high-value or significant assets — including land, buildings, civil engineering works, fixtures and fittings, vessels and aircraft — cannot be treated as used for business purposes to the extent they are put to private use by the taxable person or their staff.
• HMRC has wide regulation-making powers covering evidencing requirements for input tax claims, pre-registration and pre-incorporation input tax recovery, repayment of VAT to formerly registered persons, and the treatment of non-business VAT under partial exemption rules.