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HMRC have issued guidance on a change in their policy regarding re-claiming VAT on computers. The rule affects computers which are made available by employers to their employees for personal home use.
Old rules: Where an employer loaned an employee a computer for personal use at home, this was treated as a benefit-in-kind and HMRC effectively disregarded the VAT implications of private use of the asset. Employers who have already loaned computers to employees before the change in rules do not have to change the VAT treatment of these assets.
New policy: HMRC now expect businesses to identify private use and account for the VAT on that private use. Where a computer is required by an employee to carry out their job, HMRC have agreed that the private use in these cases will not be significant and therefore a full reclaim of VAT is permitted. However, it is up to the employer to demonstrate that the asset is provided by virtue of employment, otherwise only a proportion of the VAT can be re-claimed. HMRC will accept any method of apportioning the VAT aslong as the result fairly reflects the extent of business use.
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