VAT on mixed supplies

VAT

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A project has mixed vatable income say 50% vatable  and 50% non vatable  from donations. Say total VAT on income is £10,000. When recovering the VAT on the input side do you claim 50% of the total input VAT per vatable expense, which may add upto say £7500 input VAT, or can you claim upto £10,000 input VAT (to match the output VAT). 

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By WhichTyler
24th Oct 2016 12:33

the usual 'get proper advice' and 'you haven't given enough information' rules apply, I'm afraid.

How much input tax you can recover depends on what the input tax is incurred on.

Some CPD around partial exemption is needed, you can start here if you feel up to it

https://www.gov.uk/government/publications/vat-notice-706-partial-exemption

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By Josie Malloy
25th Oct 2016 10:53

Thanks for the reply but it's not a partial exemption question. I'm talking about the VAT on the costs associated directly with the project. I've already read the VAT blurb and don't find it useful on this occasion.
OK you asked for more information:
Income £100,000 net output vat £10,000
Capital costs £37,500 net input vat £7,500
Salary costs £60,000
Admin costs £2,500

Of the £7,500 input vat - can the full amount be reclaimed (as it is less than the £10K output tax) or is it restricted to 50% ie £3,750 (being the percentage of output tax on the total income).

Many Thanks

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paddle steamer
By DJKL
25th Oct 2016 11:15

Is it a charity? If it is have you read 701/1, particularly 3 onwards?

https://www.gov.uk/government/publications/vat-notice-7011-charities/vat...

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Replying to DJKL:
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By Josie Malloy
25th Oct 2016 13:46

I have read 701/1 section 3 and that is all about partial exemption of the non-business expenses. I can't find anything to direct me on how much direct input vat can be reclaimed on a mixed supply of direct income.
Guess I'll have to pay for some professional advice.
Thanks all for reading

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