Customs will shortly be issuing further guidance regarding the attribution of costs when calculating VAT recovery on business activities. This is following concerns that direct attribution is only being done to a limited extent which possibly results in over recovery of VAT which relates wholly to non-business healthcare activities.

We have therefore been working very closely with Customs recently in order to ensure that our working methods for business and partial exemption reviews are acceptable. As such, we have developed a range of improved analysis techniques which aim to maximise direct and indirect input tax recovery and minimise partial exemption exposure and at the same time are considered ‘fair & reasonable’ by Customs.

This does however mean that we ask our clients for a bit more information than before to complete these reviews, however we can demonstrate the value of this by identifying more accurate VAT savings which are agreed by Customs. Furthermore, we continue to carry out ‘re-reviews’ of business and partial exemption where a review has already been carried out by previous VAT advisers and to-date we have identified in excess of £1.25M of additional savings. Proof that not all VAT advisers are the same!