Other issues relating to partly exempt businesses

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

Overview

A business which makes exempt supplies faces a number of issues which are not faced by businesses which only make taxable supplies. These issues and their implications are set out below.

See the Examples ― VAT registration in respect of taxable and exempt supplies.

Registration

A business or person that only makes exempt supplies is not entitled to register for VAT in the UK. This is because only businesses that make taxable supplies, or make supplies which would be taxable were they made in the UK, are entitled to register for VAT. In reality, there would be little point in a business that makes wholly exempt supplies VAT registering, as it would not be able to reclaim any input tax incurred on costs associated with its business activities and no output tax would be due on exempt sales.

However, many businesses make a mixture of exempt and taxable supplies and are therefore usually required to be registered for VAT if the value of

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