VAT and Partially Exempt Organisations
Many goods and services are liable to VAT but there are some that are exempt (as opposed to zero rated), including education, training, insurance, charitable fund-raising events and finance.
You will not be able to register for VAT if all of the goods and services that your business sells are exempt from VAT. That will mean that you cannot reclaim any VAT on your business purchases.
If some of your sales are of products that are rated for VAT (even at zero rate) you can register for VAT, but if you incur any input tax on purchases that will be used to make VAT exempt supplies you will be partially exempt.
Being partially exempt means that some fairly complicated rules will govern the claiming of input tax. Two calculations will be required each time you complete your VAT return, plus an annual adjustment to ensure that the VAT is correct.
If you are partially-exempt for VAT purposes, contact us for assistance with your VAT calculations, or with your VAT accounting to maximise your VAT recovery.