One of the most complex and litigated areas of VAT, partial exemption creates an absolute cost to companies in terms of their inability to fully recover VAT incurred.
Businesses that make taxable and exempt supplies, are classed as partially exempt.
Whilst intended to be black and white, the reality is much more complicated
Difficulties arise from correctly allocating VAT on costs across the business and calculating the amount of VAT to recover on general overhead costs; to determining a partial exemption method of calculation which reflects the use of the cost by the business.
Irrecoverable VAT creates an absolute cost so it is important for partially exempt companies to optimise the recovery of VAT on business expenditure.
Here at Smith Cooper our specialists appreciate the need to make the process of calculating VAT for partially exempt businesses as easy as possible. We have extensive experience of working closely with partially exempt businesses including charities and not-for-profit organisations. As such, our team can offer a complete suite of services in this area.