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Companies in exempt sectors such as finance, health, insurance, and education can only reclaim VAT on purchases to the extent that those purchases are attributable to taxable (i.e. non-exempt) sales.

  • What if a purchase is used to make both exempt and taxable sales?
  • How much VAT can be reclaimed?

The simple answer is that you must follow a specific calculation to determine how much VAT you may recover.  Sometimes, this calculation will deliver a result which is unrepresentative of how & where your business or organisation consumes costs.  In such instances a bespoke Partial Exemption Special Method (PESM) might serve you better.

We have successfully negotiated advantageous special VAT recovery methods with HMRC for our clients on many occasions.