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VAT is chargeable on supplies of goods and services made in the UK by a taxable person in the course of a business, unless those supplies are exempt (or zero-rated, for which, see Practice Note: VAT—zero-rated and reduced rate supplies).

VAT exemption has three main consequences:

1. •

   the supplier is not required to charge VAT

2. •

   the value of the supply is not taken into account when deciding whether the supplier must register for VAT, and

3. •

   the supplier cannot recover any input tax attributable to its exempt supplies—for a business that makes exempt supplies, such input tax is therefore an absolute (and not just a timing) cost

For an explanation of the rules on recovery of input tax, see Practice Note: When can a person recover VAT?

The Value Added Tax Act 1994 (VATA 1994) lists 16 categories of exempt supplies, referred to as groups. These were derived from EU Council Directive 2006/112/EC (the VAT Directive) or its predecessors, but there were important differences between the UK legislation and the VAT Directive. In cases of doubt,