Partial Exemption affects so many business sectors, from property to education to financial services to retailers and many more.
Here we’ve given some examples of businesses in different sectors and how using a VAT consultant reduced VAT loss and minimised the hassle of dealing with partial exemption or the business.
- Education
A partly exempt group providing services in the education sector acquired a new company so needed to re-organise its VAT registration arrangements. By reviewing the VAT liability of the new business’s supplies and a comprehensive review of the groups’ costs, VAT savings in excess of £600k per annum were achieved.
- Financial Services
Partly exempt businesses can minimise exempt input tax loss by agreeing special partial exemption methods with HMRC which reflect their unique circumstances. In one case, a foreign bank with a number of branches in the UK was able to save £100k each year after negotiating a new partial method and a large insurance broker obtained a one-off claim of over £200,000 as a result of changes to its partial exemption method.
- Retailers
Retailers who implement new logistics systems often find that they no longer have the information that they need to implement existing partial exemption or retail schemes. However this can actually work in their favour. One retailer found that by adopting a more flexible approach to the use of the new types of data from the new logistics system, it was possible to design a more precise partial exemption special method than before and reduce the exempt input tax by about £40k per annum.
- Taxable businesses with property portfolios
Businesses whose main activity is fully taxable, such as manufacturers, can also have complex partial exemption issues if they have significant property portfolios. A large manufacturing group had spent years trying to deal with messy partial exemption issues due to its property portfolio and often received assessments because of mistakes. As a result, the FC spent far more time dealing with this issue than his job spec required.
A review of its VAT affairs recommended some very practical changes to reduce the management time required to deal with the subject and avoid unforeseen VAT assessments, which had always messed up the FC’s budgets. There was an additional VAT saving of around £20k each year (which paid for the review!) but the main benefit to the group came was the fact that the FC didn’t have to spend so much time dealing with detailed VAT issues and there were no more unforeseen assessments.
Partial exemption is complicated and we can work with you to minimise the hassle and reduce VAT costs for your clients.