Andrew Needham looks at how, and under what circumstances, an exempt business can recover VAT on a property.
The essential point for a business making exempt supplies is that it cannot recover the VAT on costs relating to those supplies.
If a business only makes exempt supplies, it cannot register for VAT or recover any VAT on its costs. A business that makes both taxable (including zero-rated) and exempt supplies can register for VAT and recover a proportion of the VAT on its costs.
Previous VAT planning ideas
Following the introduction of the option to tax in 1989, many exempt businesses realised that there were tax planning opportunities that would allow them to recover the VAT on the purchase and refurbishment of commercial properties they traded from.
The plan was simple; the exempt business (ExemptCo) set up another company )
