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Working from home - another benefit?

Do you use or provide a computer for home working? If so, you may not be aware of a change in HMRC policy.

Following the removal of the tax exemption for the loan of computer equipment by employers to employees (Home Computer Initiative (“HCI”)), HMRC have issued Business Brief 55/2007 which sets out the revised VAT policy in relation to computers provided by employers to employees who work from home.

Previously HMRC had been happy to accept that any private use of such computers could be ignored and that full VAT recovery was allowed. However, with effect from 15/8/07, HMRC will look for evidence that it is “necessary” for the employer to provide the computer in the first place. If this evidence is not available, then an apportionment of input tax will be required to reflect any private use element. It may be possible to agree a fixed percentage with HMRC.

Businesses providing computers under an existing HCI agreement can continue to reclaim full VAT until the agreement has expired (normally 3 years).

In practice, would a business provide a computer to employees unless it was necessary for them to carry out their duties? And how do you monitor the level of private use? Therefore, it seems that the best approach would be to argue that any private use is insignificant and should continue to be ignored.



Date: 22nd October, 2007
Author: Jane Stacey


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