Value Added Tax Act 1994 Schedule 11A para 2A

Meaning of "non-deductible tax"

Schedule 11A paragraph 2A defines "non-deductible tax" for the purposes of the VAT avoidance disclosure regime, covering VAT that a business cannot recover either as input tax credit or by way of refund.

• Non-deductible tax is input tax for which the taxable person has no entitlement to credit under section 25 of the VAT Act 1994.
• It also includes any VAT incurred that does not qualify as input tax and for which no refund is available from HMRC under any provision of the Act.
• VAT is treated as "incurred" when it arises on supplies of goods or services received, on acquisitions from other member states, or on imports from outside the member states.
• The definition is relevant to the disclosure rules for VAT avoidance schemes introduced by the Finance (No. 2) Act 2005.