Can a UK Business Claim VAT on ASIC Miners and Electricity?

Claim VAT on ASIC miners: Input VAT can normally be deducted where a VAT registered business receives the supply and the cost has a direct and immediate link.

The basic input VAT test

Input VAT can normally be deducted where a VAT registered business receives the supply and the cost has a direct and immediate link to outputs carrying a right to deduct. Keep a valid invoice addressed to the registered entity and evidence of payment and intended business use.

Being a limited company or entering a company name at checkout does not by itself prove the right to deduct.

Why Bitcoin mining rewards are unusual

HMRC says Bitcoin received by miners is generally outside the scope of VAT because there is an insufficient link between services and consideration. If miners and electricity support only that non business activity for VAT purposes, the VAT can be restricted even though the activity produces taxable income for Corporation Tax.

Income tax and VAT use different tests. A commercial trade for Corporation Tax is not automatically an economic activity carrying VAT recovery.

When the answer can differ

A business selling ASIC miners, providing taxable hosting or supplying hashpower under a contract to an identifiable customer may make taxable or overseas supplies carrying a right to deduct. Shared equipment, premises and overheads must then be attributed fairly between activities. Exempt supplies can introduce partial exemption. At the same time, non business activity requires a business and non business apportionment.

Overseas customers

An overseas business to business service can fall outside UK VAT under place of supply rules while still carrying input tax recovery if it would have been taxable in the UK. Evidence of the customer’s business status and place of belonging is essential. This route should not be assumed for anonymous or decentralised mining rewards.

Electricity, hosting and repairs

The same attribution principles apply to electricity, hosting fees, replacement parts, repair invoices, immersion fluid, pumps and connectivity. Dedicated meters and cost centres make the calculation more reliable. Where one circuit or facility supports multiple activities, document the driver used to allocate VAT.

Imports and overseas purchases

Import VAT, postponed VAT accounting, customs duty and acquisition documentation are separate from domestic supplier VAT. The importer of record needs the correct evidence. Customs duty is not input VAT. Goods bought under a margin scheme or from a seller that did not charge VAT do not create a recoverable VAT amount simply because the invoice is a business cost.

Private and mixed use

Private use and use by another entity must be removed or adjusted. A miner at a director’s home can still be a business asset. But the company needs ownership, commercial purpose, metering, access and benefit arrangements that match reality. Changes in use may require later adjustment.

Worked scenarios

• Mining rewards only: full recovery may be restricted because HMRC treats the activity as outside the scope for VAT.
• Taxable hosted mining service: direct costs may support taxable outputs, subject to the contract and place of supply.
• Hardware sales plus own mining: direct costs are attributed and overheads may need a fair business, non business and partial exemption method.
• Overseas hashpower customer: the service and evidence may carry a right to deduct even where no UK output VAT is charged.

Evidence to retain

Keep invoices, import statements, asset registers, contracts, meter readings, revenue ledgers, VAT codes, customer location evidence, allocation workings and adviser conclusions. Review the method when the business model changes rather than carrying forward an old percentage indefinitely.