Partial exemption and non-business activities

We regularly advise clients (across both the commercial and the not-for-profit space) on partial exemption issues. VAT compliance is more complicated and onerous where clients are not fully taxable for VAT purposes (either because they undertake exempt activities or have non-business activities).

Partial exemption and non-business activities

We regularly advise clients (across both the commercial and the not-for-profit space) on partial exemption issues.
The VAT compliance is more complicated and onerous where clients are not fully taxable for VAT purposes (either because they undertake exempt activities or have non-business activities).

We have significant experience advising on issues including:

Redesigning partial exemption processes and procedures to ensure the processes are both compliant and efficient saving time.

Reviewing annual adjustments.

Providing partial exemption training for new and experienced finance staff.

Assisting with setting up precedents for annual adjustments and quarterly PE calculations.…

Assisting with voluntary disclosures in relation to errors.

Advising on the liability of supplies and the direct attribution of costs to those supplies.

How we've helped clients

Charitable property rental group

The situation

The client wanted to rebrand and simplify the group structure. They were selling and redeveloping properties which would significantly impact the client's partial exemption recovery position, where its operational properties were not opted to tax and the income was exempt from VAT.

The challenges

We advised the charity on the most appropriate structure to meet its wider aims and objectives. We advised on the VAT recovery position for the major redevelopment of a new property and the sale of the old property. We advised them on their partial exemption position that needs to be managed carefully for the next two years.

Our solution

Our approach focused on directly attributing costs accurately, this secured VAT recovery for the major redevelopment. We confirmed the client should be entitled to recover the VAT in relation to the sale of the old building. The benefit of our work secured VAT recovery in excess of £4million on the new property and £80,000 on the sale of the old property. The revised approach to direct attribution also saved the client £65,000 on their routine ongoing operation costs. We continue to work closely with the client and legal advisors in relation to the revised group structure, VAT grouping and rebranding.

How we've helped clients

Forex financial services client

The situation

The client was introducing an overseas debit card solution to significantly reduce foreign exchange charges. They entered into contractual arrangements with major credit and debit card provider.

The challenges

We suggested an alternative approach to managing the VAT position and registered the company for VAT. Following our review we advised that the contractual arrangements should be treated as taxable supplies of product launch, marketing and development services.

Our solution

We outlined the position to HMRC and confirmed that our approach met with their approval and we agreed the proposed structure and VAT treatments with HMRC in advance of implementation. We supported in the implementation of partial exemption procedures to manage the process for the client. We ensured that VAT-bearing expenditure was directly attributed appropriately. Over the last two years, our work has delivered savings in excess of £160,000 and we have supported in relation to the second contract won with the credit card provider. We continue to support them in managing their VAT obligations.