Covid 19 has caused many changes to the trading patterns for businesses, and as a result partially exempt businesses have felt the knock-on effect when it comes to calculating VAT recovery.
For many, this has meant that less VAT could be recovered and HMRC have acknowledged that this may not be fair and reasonable. They have therefore issued HMRC Brief 4 2021 providing guidelines for seeking approval for a temporary change to a partial exemption method.
HMRC will be using a fast-track approach to make sure coronavirus-related changes to partial exemption methods are considered, and where appropriate, approved swiftly.
If due to COVID-19 your partial exemption calculation has resulted in poor VAT recovery, get in touch and we would be happy to help. Do not just accept that low VAT recovery is fair. We would suggest that HMRC are approached before the annual adjustment is declared which is usually the VAT period after the end of the VAT year – so act now!