How to Claim for a VAT Exemption

Claiming for a VAT exemption means a business can avoid registering for VAT, with the agreement of HMRC. In this guide, I’ll explain more about what a VAT exemption is, who can apply for one and how to gain the agreement of HMRC.

If a business that would be standard rated for VAT is set to exceed the VAT registration threshold only temporarily, then it should apply for a VAT exception instead of a VAT exemption.

Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.

1. Who is Eligible for a VAT Exemption

In some cases, businesses with taxable sales (inside the scope of VAT), can apply to HMRC for a VAT exemption. There are only certain circumstances where HMRC will approve an exemption if:

  1. Taxable supplies, or any other relevant acquisitions, are zero-rated;
  2. The business can show that if they were VAT registered input tax on expenses would normally be more than input tax on sales, which would result in regular VAT repayments.

2. How to Apply for a VAT Exemption

If you wish to apply for a VAT exemption then you’ll need to contact HMRC. You can do this by either writing to their VAT registration services at

BT VAT,
HM Revenue and Customs
BX9 1WR.

Alternatively, you can apply online on the .GOV website.

Related:

Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.

About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.