Value Added Tax

Partial exemption ― related issues

Produced by Tolley
  • 22 Dec 2021 18:44

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Partial exemption ― related issues
  • Claiming late input VAT under partial exemption
  • Partly exempt group registrations
  • Transfer of a business as a going concern and partial exemption
  • Transferor
  • Transferee
  • Foreign and specified supplies
  • Financial services covered by specified supplies rules
  • Supplies of overseas branches
  • VAT accounting issues
  • More...

Partial exemption ― related issues

This guidance examines a number of important issues related to partial exemption.

For an overview of partial exemption more broadly, see the Partial exemption ― overview guidance note.

For in-depth commentary on the legislation and case law, see De Voil Indirect Tax Service V3.460.

Claiming late input VAT under partial exemption

If a partly exempt business fails to recover input tax that it is entitled to in the correct VAT return period, then it can normally make a ‘belated’ claim for the input tax. There are time limits (or ‘capping rules’) on making this sort of claim and input tax cannot be claimed more than four years after the due date for the VAT return it should have been included on.

If the annual adjustment is not capped under the capping provisions, but earlier periods covered by the annual adjustment are affected, the business can use the annual adjustment to recalculate the amount of recoverable VAT for the longer period. However, if a business has made an error in an earlier period, it cannot use the annual adjustment to correct that error. The business must use the corrected figures when undertaking the annual adjustments; however, the VAT amount must not be adjusted. Please see the Annual adjustments (longer period adjustments) guidance note for more information.

Belated claims (whether made via an error notification or any other means) must be based on the partial exemption method in place at the time the input tax was incurred.

When making such a

Access this article and thousands of others like it
free for 7 days with a trial of TolleyGuidance.

Think Tax.
Think Tolley.

Critical, comprehensive and up-to-date tax information

TAKE A FREE TRIAL

Popular Articles

Calculating QIPs

This note provides details on how to calculate quarterly instalment payments (QIPs) for large and very large companies.The instalment amounts are based on the estimated corporation tax liability of the company’s current accounting period. Therefore, this means that large and very large companies

29 Oct 2021 09:01 | Produced by Tolley Read more Read more

Effective tax rate planning

Calculation of the effective tax rateAn international group’s effective rate of tax is usually calculated as the amount of tax it pays divided by its consolidated profits. The effective tax rate depends largely on:•the rate of tax paid by each company in the group•the companies in which profits are

03 Nov 2021 16:11 | Produced by Tolley in association with Anne Fairpo Read more Read more

Share for share exchange

This guidance note considers the capital gains tax implications where shares are sold in exchange for new shares.The consideration paid by a purchasing company to the shareholder(s) for their shares in a target company could be in the form of either:•new shares in the purchasing company in exchange

10 Jan 2022 15:02 | Produced by Tolley Read more Read more