What must businesses provide to reclaim VAT on business expenses?

To reclaim VAT on business expenses, businesses must provide records of taxable supplies. This is crucial because VAT is a tax on the value added at each stage of production or distribution. To successfully reclaim VAT, a business needs to demonstrate that it has incurred VAT on purchases related to making taxable supplies.

The records should include invoices and receipts that clearly show the VAT paid on purchases that are directly linked to the business's taxable activities. Ensuring accurate and detailed records helps establish the right to reclaim VAT, as HMRC requires this information to verify the claim during audits or reviews.

While businesses may maintain other types of documentation, such as proof of business operations, historical financial data, or market analysis reports, these do not specifically relate to the VAT reclaim process. These documents may provide useful insights into the business's financial situation or operational capacity, but they do not serve as proof of input VAT incurred on taxable supplies, which is essential for the VAT reclaim process. Thus, records of taxable supplies are the critical basis for reclaiming VAT on business expenses.