³ÉÈËÓ°Òô

Article Summary

This guidance note covers the standard method for determining VAT recovery under partial exemption. The standard method is the default way that partly exempt businesses (those making both taxable and exempt supplies) calculate how much input tax they can recover. It involves directly attributing input tax to taxable and exempt activities, with the remaining 'residual' VAT apportioned based on the value of taxable supplies compared to total supplies. Businesses should exclude certain supplies like incidental real estate and finance transactions from this calculation. They can use simplifications like the prior year percentage for provisional recovery. The guidance covers key aspects like percentage rounding, supplies of overseas branches, excluded financial services, and the 'override' which can require an adjustment if the standard method does not fairly reflect use. Overall the guidance provides a useful overview of the key considerations and practical steps those using the standard method need to be aware of.