SE15530 - Value Added Tax: inter-relation with emoluments and expenses - deductions for expenses

Section 198(1) ICTA 1988

Where a deduction for expenses can be permitted under Section 198(1) ICTA 1988 the amount to be deducted for any expense should normally include the full amount of VAT, whether or not the employer may subsequently recover all or part of it from Customs and Excise.

Where, exceptionally, a Section 198(1) deduction can be made against the charge on a benefit based on the cost of providing an asset for a director etc, the VAT included in the deduction should not exceed the VAT included in arriving at the amount of the emolument.