VAT—partial exemption

Published by a ��ɫ�� Tax expert

Practice notes

VAT—partial exemption

Published by a ��ɫ�� Tax expert

Practice notes

Businesses are partially exempt for VAT purposes if they make both taxable and exempt supplies. For a description of the types of supplies that are exempt from VAT, see Practice Note: Exemptions from VAT.

This Practice Note explains:

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when a partially exempt business can recover its Input tax
•
the standard method of calculating the input tax a partially exempt business can recover
•
the De minimis Rules for recovering input tax
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how a business carries out an annual adjustment
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the standard method override
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an overview of special methods of calculating the input tax a partially exempt business can recover
•
the special method override
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the impact of non-business activities on a business's partial exemption position, and
•
the application of the partial exemption rules to VAT groups

For details of the recovery of VAT paid on professional fees (of accountants, lawyers and other advisers) incurred on business sales and acquisitions, share sales and acquisitions, corporate restructurings, and share issues, see Practice Note: VAT recovery on corporate transactions.

This Practice Note includes

Jurisdiction(s):

United Kingdom

Key definition:

Input tax definition

What does Input tax mean?

vat chargeable under the UK or Isle of Man legislation which is incurred by a taxable person in respect of goods or services used (or to be used) for the purposes of a business carried on (or to be carried on) by him (Value Added Tax Act 1994, s 24(1)).

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