Purchase Tax Control Account
Current LiabilitiesThis holds the VAT the business has paid on purchases, which can usually be reclaimed from HMRC. It's typically shown as a debit balance within the VAT liability, offsetting the Sales Tax Control Account — input VAT on purchases increases it (debit).
Real-world examples
Manufacturing
A manufacturer making only standard-rated sales can reclaim input VAT in full on almost everything it buys. A £6,000 machinery invoice (£5,000 net, £1,000 VAT) is a debit of £5,000 to the relevant asset code, a debit of £1,000 to 2201 (Purchase Tax Control Account), and a credit of £6,000 to 2100 — the full £1,000 is recoverable against output VAT.
Business buying a company car
Input VAT on the purchase of a car is normally blocked altogether, regardless of the buyer's business, unless it's used exclusively for business purposes with no private use at all — a test HMRC applies strictly. A sales rep's new car costing £24,000 including £4,000 VAT is posted as a debit of £24,000 to the motor vehicles asset code, VAT included, rather than being split out to 2201 at all, because that £4,000 simply can't be reclaimed.
Partially exempt business
A business with some VAT-exempt income — a letting agent handling residential lets, say, where the rental income is exempt — can't reclaim all its input VAT, only the proportion relating to taxable supplies. A £1,200 general overheads invoice (£1,000 net, £200 VAT) might only be 60% recoverable if 40% of income is exempt, so only £120 is debited to 2201, with the remaining £80 left in the cost of the expense code rather than reclaimed.
Commonly confused with
Because code 2200 (Sales Tax Control Account) sits right next to this one in Current Liabilities, it's a common mis-posting target. Code 2201 is specifically for purchase tax control account, while 2200 covers sales tax control account — similar in nature, but keeping them separate is what makes the current liabilities section of your management accounts meaningful rather than a single lumped total.
What a mis-posting here costs you
An error posting to Purchase Tax Control Account misstates what the business owes, and for a Current Liabilities code specifically it can distort the working capital and current ratio that lenders and suppliers look at when assessing short-term financial health.