Has the coronavirus pandemic had a detrimental effect on VAT recovery for your organisation?

If the coronavirus pandemic has had a detrimental effect on VAT recovery for your partially exempt business or charity it may be appropriate to consider a retrospective change to the partial exemption method.

Organisations that are partially exempt carry out an annual adjustment each year, often during April, May or June, depending on their VAT Return submission period. HMRC has confirmed that it has decided to take a sympathetic approach to requests to apply a different method of calculating entitlement to recover VAT if the coronavirus pandemic has had a detrimental effect on VAT recovery. This includes requests to apply a more favourable partial exemption method when carrying out the annual adjustment.

Examples of when it may be appropriate to consider a different method include:

  • Taxable income as a proportion of taxable and exempt income has reduced as a result of the coronavirus pandemic, or;
  • Refunds have been made to customers for taxable supplies that had been paid for in advance but were unable to be made as a result of the coronavirus pandemic, for example, tickets sold for events that had to be cancelled.

To find out how Garbutt & Elliott LLP can help your organisation please contact Alex Millar or Naveen Sahney at support@garbutt-elliott.co.uk