Revised treatment of VAT on home computers - 16 August

HM Revenue and Customs have published revised guidance via a 'Revenue and Customs Brief' on the VAT treatment of computers made available by employers for use in their employees' homes; this follows the withdrawal of the tax exemption which allowed employers to loan computers to their employees tax free.

HMRC’s policy to allow full VAT recovery without any adjustment for private use, in circumstances where there is any business use, has been withdrawn from the date of this Revenue and Customs Brief.

With immediate effect, businesses must consider why the computer is being provided to the employee to determine the level of VAT that can be claimed. Businesses will only be able to claim full VAT recovery without any requirement to account for VAT on any private use (subject of course to any restriction in respect of exempt supplies) where the provision of a computer is necessary for the employee to carry out the duties of his employment. 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. This mirrors the approach taken for direct tax concerning exemptions for work related benefits in kind where there is no significant private use.

Source: Revenue & Customs Brief 55/07