One of the founding principles of the VAT system is that VAT incurred on costs can be reclaimed, provided it can be linked to a transaction which affords a right to VAT recovery. But how strong does this link have to be? The Court of Justice of the European Union (CJEU) decision in Kretztechnik appeared to have clarified the matter, however two recent cases, University of Cambridge and Frank Smart, have thrown this into doubt and for many the answer is now no clearer.
Source RSM
