A VAT registered business can usually reclaim VAT on their purchases and payments made to VAT registered suppliers. However, there is some expenditure that are disallowed for VAT purposes.
Input VAT on the purchase of motor cars cannot be reclaimed but VAT on vans or other vehicles solely for the purpose of the business use are reclaimable. Other expenses which input taxes are not reclaimable are business entertaining expenses and goods bought under second hand schemes.
Accordingly you do not have to distinguish the VAT in your accounting records; just treat the total payment including VAT as an expense of your business.
Canterbury Accountancy - making VAT administration simple for small owners managed businesses and companies.
