Andrew Needham looks at the partial exemption special method override and when it can be used.
After a business has agreed a partial exemption special method with HMRC, circumstances can change; but if the method no longer produces a fair result, can it be overridden?
Partial exemption special method
Most businesses that are partially exempt (so cannot recover all their input tax because they make some exempt supplies) use the ‘standard method’ to calculate the input tax that they can recover.
However, the standard method does not always produce a ‘fair and reasonable’ result, so businesses can agree a ‘special method’ with HMRC. A special method can be anything as long as it produces a fair and reasonable result and is agreed with HMRC in advance.
