VAT: hire purchase arrangements

HMRC has updated Revenue and Customs Brief 8 (2020): change to partial exemption VAT treatment to clarify its position on the recovery of input tax on overheads incurred in relation to the supply of goods on hire purchase.

The calculation for an output values-based method of apportionment under the heading ‘HMRC position’ has been updated to confirm that, where the amount of credit is less than the total value of the asset, both the amount shown as the value of the asset and the value of the exempt credit would be reduced.