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VAT and Partially Exempt Organisations

VAT and Partially Exempt organisations

Although many goods and services attract VAT there are some that are exempt (as opposed to zero rated), these include insurance, finance, education, training and charitable fund-raising events.

If all the services and goods that you sell areexempt then your business is exempt and you can't register for VAT. This means that you will not be able to reclaim any VAT on your business purchases.

However if some of your sales are of products that are vatable (even at zero rate) you can register for VAT, but if you incur any input tax on purchases that will be used to make VAT exempt supplies you will be partially exempt.

Partial exemption means that some quite complex rules will apply to the claiming of input tax with two calculations needed each time you complete your VAT return and an annual adjustment once a year to make sure that the VAT is correct.

If you are partially-exempt for VAT purposes and need advice about your VAT calculations or your VAT accounting to maximise your VAT recovery please contact Moore Stephens Peterborough.


A specialist Moore Stephens VAT website – click here to go to the main Moore Stephens UK website