Value Added Tax Act 1994 section 26

Input tax allowable under section 25

Section 26 sets out the rules governing how much input tax a taxable person may claim as credit, and requires HMRC to make regulations ensuring that input tax is fairly attributed to qualifying supplies.

• Input tax credit is only available to the extent that the input tax is attributable to taxable supplies, supplies outside the UK that would be taxable if made here, or other supplies specified by Treasury order
• HMRC must make regulations to secure a fair and reasonable method of attributing input tax to these qualifying supplies
• The regulations may set provisional attribution proportions for each accounting period and allow adjustments over longer periods, as well as corrections where initial estimates prove inaccurate
• Different rules may apply to different circumstances or different types of goods and services, and input tax on a supply a person makes to themselves cannot be treated as attributable to that same supply