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Definition
Input VAT is the VAT charged to you by suppliers on business purchases. On the standard scheme you reclaim it against the output VAT you have charged, so you only pay HMRC the difference.
In plain terms
It is the offset that stops VAT stacking up at every stage of a supply chain. Every pound of input VAT you correctly reclaim is a pound off your bill.
Why it matters for your company
Keeping accurate records of input VAT directly lowers what you pay. Note the Flat Rate Scheme usually forgoes input-VAT reclaim.
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