HMRC have issued guidance on a change in their
policy regarding VAT recovery on computers.
The rules affect computers which are made
available by employers to their employees
for their personal home use. The change in
guidance is as a result of the withdrawal
of the favourable benefit in kind treatment
which used to apply to employees who were
loaned computer equipment for personal use
at home. When the favourable benefit in kind
treatment applied HMRC effectively disregarded
the VAT implications of private use of the
asset. Employers who have already loaned
employees computers prior to the change in
the benefit in kind rules do not have to
change the VAT treatment of these assets
and related costs.
HMRC will now expect businesses to identify
private use and account for VAT on the private
use. This is the treatment that should be applied
to other business assets where private use
is allowed such as mobile phones.
This change in policy will not affect businesses
where computers are made available to employees
who need the computer in order to carry out
their job. In these circumstances, HMRC’s
view is that it is unlikely that any private
use will be significant when compared with
the business need for providing the computer
in the first place.
If an employer is unable to demonstrate that
it is necessary to provide an employee with
a computer in order to carry out the duties
of his employment, only a portion of the VAT
incurred can be reclaimed.
Internet link:
HMRC
VAT Brief |
