Commentary

V7.342 Partial exemption—introduction

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.342 Partial exemption—introduction

Part V7 Tax planning | Commentary

Partial exemption

V7.342 Partial exemption—introduction

Partial exemption is one of the most complicated aspects of VAT law, and becomes relevant to a business that makes some supplies that are taxable and some that are exempt. It should be remembered that taxable supplies include zero-rated and reduced-rated supplies of goods or services – not just those that are standard rated.

In basic terms, there are three common situations:

  1.  

    •     Taxable supplies only – a business that wholly makes taxable supplies is able to recover all of its input tax, subject to normal rules. If most or all of these supplies are

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