What are the three parts of the VAT capital goods scheme?

The three parts of the VAT capital goods scheme focus on the adjustment of input VAT that businesses can claim on capital assets based on their usage throughout the asset's life. Input VAT recoverability is a core component as it pertains to the initial entitlement to reclaim VAT on capital goods when they are purchased. The adjustment period is significant because it specifies the timeframe over which a business must adjust its VAT claims if the level of taxable use changes, typically spanning several years. Sale adjustments refer to how the VAT treatment of an asset may need to change when it is sold, particularly if the asset was previously adjusted for its use in taxable versus exempt activities.

These components are essential for businesses to correctly apply the capital goods scheme, ensuring that they comply with VAT regulations while managing their VAT claims appropriately over time. The other options mentioned focus on unrelated elements such as operational costs, sales reporting, and annual VAT thresholds or audit procedures, which do not fit into the structure and specific requirements of the capital goods scheme.