VAT on computers provided for home use - revised treatment

On 6 April 2006 the Government withdrew the Home Computer Initiative - from that date the provision of a computer for home use to an employee may become a taxable benefit.

HfM accountants are reminding businesses that on 13 August 2007 the VAT rules caught up!

Up to 13 August 2007 employers could still reclaim all the VAT they paid when they purchased a computer for an employee's home use, as long as there was an element of business use.

From 13 August 2007 the VAT position is as follows:

If the use of a computer at home is necessary for an employee to carry out their duties, the employer can reclaim all the VAT.
In all other cases the reclaim of VAT will have to mirror the business to private use percentage.

In their notice relating to this issue Customs have said, "HMRC will accept any method of apportioning the VAT incurred as long as the result fairly and reasonably reflects the extent of the business use."

With VAT matters becoming increasingly complex visit our dedicated VAT section for the answers to all your VAT queries, including; How to handle a VAT investigation, An overview of the flat rate VAT scheme and many more.

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Sign Up! - Make sure you sign up to our FREE weekly newsletter for the latest tax news and advice for small companies. Posted October 5, 2007

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