Value-Added Tax (VAT) can already be a complicated tax to navigate; the tax that is applied to the sale of taxable goods and services at every stage of production. There are a number of goods and services however that are exempt from VAT for various reasons. If you are a business that makes or sells both taxable and exempt (non-taxable) goods or services then VAT can be extremely difficult to calculate when it comes to filing your taxes. In this scenario, you would be classed as a partially exempt business.

When filing your VAT return you ultimately need to calculate your tax liability by looking at the difference between the output VAT and input VAT charges. There are some watch-outs and confusions that regularly occur. For example, zero-rate or reduced-rate items are not the same as exempt items but zero-rated items in particular, often get mixed up with exempt items. People ask ‘is there a difference?’ The answer is there’s a massive difference between the 2 when claiming back against your expenses.

By understanding how partial exemption works, businesses can correctly calculate the costs they can reclaim. Very few businesses can calculate this correctly without the services of VAT experts. At Bracey’s, we are well-positioned to provide expert advice on this very complex tax. Our VAT team have a wealth of experience in advising across multiple areas of VAT making savings for clients where possible and paying any due taxes where necessary. As a business, you can be assured you get the best advice to give you the confidence that your projects are VAT compliant and that your liabilities are as low as they can possibly be.

Give us a call to have a 30-minute free consultation to see how we can help your partially exempt business manage your VAT.