What is a capital asset (for VAT purposes)?
Capital assets – which can be either tangible or intangible - are both material and immaterial goods and services that are allocated by a business for long-term use as a business instrument or as a means of investment. Items for resale are not considered capital assets for VAT purposes.
How does the VAT treatment of a capital asset impact my business?
Most businesses are likely to have some capital assets – even something as small as a laptop or PC – to run their day-to-day business. Where the actual use of a capital asset differs from its intended use on purchase, an adjustment is likely to be required.
Examples of capital assets
Intangible capital assets include software, trademarks and royalty agreements. Tangible capital assets include machinery, land and buildings.