VAT charged on a business purchase is not automatically recoverable. The FTA explains that input tax can generally be recovered where it relates to taxable supplies made or intended to be made by the VAT registrant, subject to the VAT Law and its exceptions. Costs linked to exempt or non-business activities may not be recoverable, and mixed-use expenses can require apportionment.
Build evidence around each claim
- Retain the tax invoice or other evidence accepted under the rules.
- Record who incurred the cost, what was purchased and how it supports the business.
- Identify whether the cost supports taxable, exempt or non-business activity.
- Use a documented, fair apportionment method where a cost is shared.
Reconcile before filing
Compare the purchase ledger and VAT control account with the VAT return. Investigate unusual input-tax movements, duplicate invoices, credit notes and costs posted to personal or mixed-use accounts. Apply any specific restrictions and current FTA clarifications before claiming.
The treatment is transaction-specific, and FTA decisions issued in 2026 address verification of certain supplies. Businesses should check current legislation and guidance rather than rely on a generic rule of thumb.
Sources: FTA input tax and partial exemption FAQ and FTA VAT legislation.
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