Partial Exemption VAT

Partial Exemption VAT Expertise

Businesses that make both taxable and exempt supplies face complex partial exemption rules that can significantly impact input tax recovery. Partial exemption calculations determine how much input tax can be recovered, and the method used can have substantial financial implications. Acumon's partial exemption VAT service provides expert advice to maximise input tax recovery and ensure compliance.

Our team includes VAT specialists with extensive experience in partial exemption, including standard method calculations, special method development and negotiation, de minimis rules, and annual adjustment procedures. We understand the complexities of partial exemption and can help businesses optimise their input tax recovery.

Partial Exemption Methods

Partial exemption requires selection of an appropriate method to calculate recoverable input tax. Our service includes:

• Standard Method: Application of the standard partial exemption method, including calculation of recovery percentages and annual adjustments
• Special Method Development: Development of bespoke partial exemption methods tailored to specific business circumstances
• Special Method Negotiation: Negotiation of special methods with HMRC, including preparation of method proposals and supporting documentation
• Method Comparison: Comparison of different partial exemption methods to identify the most beneficial approach
• Method Reviews: Regular reviews of partial exemption methods to ensure they remain appropriate and beneficial
• De Minimis Rules: Application of de minimis rules to enable full input tax recovery where exempt input tax is below thresholds

Input Tax Attribution

Accurate attribution of input tax to taxable and exempt activities is critical for partial exemption calculations. Our service includes:

• Direct Attribution: Identification of input tax that can be directly attributed to taxable or exempt supplies
• Residual Input Tax: Calculation of residual input tax that cannot be directly attributed
• Overhead Allocation: Development of methods to allocate overhead costs between taxable and exempt activities
• Cost Centre Analysis: Analysis of cost centres to identify appropriate allocation methods
• Use-Based Allocation: Development of use-based allocation methods for shared costs
• Time-Based Allocation: Application of time-based allocation methods where appropriate

Annual Adjustments and Reviews

Partial exemption requires annual adjustments to correct provisional recovery percentages. Our service includes:

• Annual Adjustment Calculations: Accurate calculation of annual adjustments to correct provisional recovery percentages
• Annual Adjustment Returns: Preparation and submission of annual adjustment returns
• Longer Period Reviews: Conduct of longer period reviews where required by HMRC
• Method Effectiveness Reviews: Regular reviews of partial exemption method effectiveness
• Compliance Audits: Internal audits of partial exemption compliance to identify and address issues

Sector-Specific Partial Exemption

Different sectors face specific partial exemption challenges. Our sector expertise includes:

• Financial Services: Expertise in partial exemption for financial services businesses, including insurance, banking, and investment services
• Property: Specialist knowledge of partial exemption for property businesses, including development, letting, and property management
• Healthcare: Understanding of partial exemption for healthcare providers, including NHS and private healthcare
• Education: Expertise in partial exemption for educational institutions, including schools, colleges, and universities
• Charities: Specialist knowledge of partial exemption for charities and not-for-profit organisations
• Housing Associations: Understanding of partial exemption for housing associations and social landlords

Partial Exemption Planning

Strategic partial exemption planning can significantly improve input tax recovery. Our planning service includes:

• Supply Structure Optimisation: Restructuring of supplies to improve partial exemption recovery rates
• Cost Allocation Strategies: Optimisation of cost allocation methods to maximise recoverable input tax
• De Minimis Planning: Strategic planning to remain within de minimis thresholds where beneficial
• Method Selection: Selection of the most beneficial partial exemption method for specific circumstances
• Special Method Development: Development of bespoke methods that better reflect business activities

Why Choose Acumon for Partial Exemption VAT Advice

• Partial Exemption Expertise: Extensive experience in partial exemption calculations, special method development, and HMRC negotiations.
• Special Method Negotiation: Proven track record in developing and negotiating special partial exemption methods with HMRC.
• Sector Knowledge: Deep understanding of sector-specific partial exemption challenges and opportunities.
• Maximise Recovery: Strategic approach that maximises input tax recovery through optimal method selection and cost allocation.
• HMRC Experience: Many of our VAT specialists have previously worked for HMRC, providing unique insights into method approval processes.
• Integrated Service: Combined VAT, tax, and accounts expertise enables comprehensive understanding of all aspects of partial exemption.