Search News


JC Accounts Ltd
The Loft
Hill End Farm
Langley, Herts
SG4 7PT
01462 477 918
This email address is being protected from spambots. You need JavaScript enabled to view it.

News

Source: HM Revenue & Customs | | 08/09/2020

A business that incurs expenditure on taxable and exempt business activities is partially exempt for VAT purposes. This means that the business is required to make an apportionment between the activities using a 'partial exemption method' in order to calculate how much input tax is recoverable.

HMRC’s guidance explains that as a VAT-registered business, you can recover the VAT on your purchases which relates to taxable supplies that you make or intend to make. There are some items where input tax recovery is ‘blocked’. Supplies that are made outside the UK that would be taxable if in the UK and certain exempt supplies to non-EU customers also give the right to recover VAT, but there are special rules. In principle, you cannot recover VAT that relates to any exempt supplies, although you may be able to if the VAT is below certain limits.

There are a number of partial exemption methods available. The standard method of recovering any remaining input tax is to apply the ratio of the value of taxable supplies to total supplies, subject to the exclusion of certain items which could prove distortive. The standard method is automatically overridden where it produces a result that differs substantially from one based on the actual use of inputs. It is possible to agree a special method with HMRC.

The VAT incurred on exempt supplies can be recovered subject to two parallel de-minimis limits.



Latest News

The new Winter Economy Plan - Summary of Measures
24/09/2020 - More...
The Chancellor, Rishi Sunak, has today delivered a statement to the House of Commons outlining plans to help protect

Venues required to record contact details
23/09/2020 - More...
It has become a requirement for premises and venues across England to have a system in place to record contact details

Changes to duty free shopping
23/09/2020 - More...
The government has published the new rules for duty free and tax free shopping that will come into effect from 1 January

Newsletter

With our newsletter, you automatically receive our latest news per e-mail and get access to the archive including advanced search options!

» Sign up for the Newsletter
» Login