Commentary

V7.356 Partial exemption special methods—introduction

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.356 Partial exemption special methods—introduction

Part V7 Tax planning | Commentary

Partial exemption—special methods

V7.356 Partial exemption special methods—introduction

In the previous section, we considered the key issues for a partly exempt business as far as input tax restriction was concerned on costs attributable to exempt supplies. The main principle of input tax recovery – the 'golden rule' – is that it can only be recovered to the extent that it relates to taxable supplies.

The assumption made in that section was that a business was using the standard method for partial exemption purposes, which basically works as follows:

  1.  

    •     input tax attributable wholly to taxable supplies can be reclaimed in

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