Can VAT exempt employers claim back the VAT on purchases for the Cycle to Work Scheme (Input Tax)?

Businesses that are unable to recover all of their input VAT will from 01/01/2012 be able to claim VAT, subject to the normal rules on input VAT recovery, on acquiring a bicycle that is hired to employees under a salary sacrifice. It is a principle of the VAT system that, broadly speaking, if you make supplies that are subject to VAT then you can claim input (purchase) VAT that is wholly related to that supply.

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