VAT Return- zero sales- plan to be partially exempt but have no idea what the proportion of exempt to taxable supplies will be?

VAT Return- zero sales- how much to reclaim?

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My client is a small internet company. They have a functioning website with lots of visitors, but they have not yet implemented any way to make money- they are focusing on increasing users first and adding features. 

The intention is that they will have both taxable and exempt supplies one day, but it is anyone's guess what the split between these will be. So I guess this makes them 'partially exempt' but what % to use if we have no idea what the split between taxable and exempt supplies will be?

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RLI
By lionofludesch
25th Sep 2016 11:31

What is your client selling? Or rather, intending to sell?

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By mcplums
17th Dec 2016 11:14

-

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Scalloway Castle
By scalloway
25th Sep 2016 18:28

For partial exemption you do an annual adjustment in the 5th VAT quarter. Everything should be clear then as to how much VAT is recoverable.

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By mcplums
25th Sep 2016 18:33

So until the annual adjustment it is appropriate to just 'guess'?

Not that I can think of any other way of doing it.

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Replying to mcplums:
RLI
By lionofludesch
25th Sep 2016 18:43

Not quite. You should claim the proportion Taxable/Total in each quarter 1-4, then in the fifth quarter, recalculate using all four quarters figures and make an annual adjustment.

You problem in the short term is that your proportion is 0/0, which, mathematically, has no answer.

So, until you make some sales, yes, you'll just have to guess.

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By cheekychappy
25th Sep 2016 20:43

Your analysis of the exempt supply is, at best, misguided.

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Replying to cheekychappy:
Jonathan@Aiteo
By Jonathan@Aiteo
26th Sep 2016 10:25

Oh go on, you've got us all interested now.

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Stepurhan
By stepurhan
26th Sep 2016 11:19

They currently are not in a position to make any sorts of sales (as you say, they have not implemented any way to make money).

As such they should not be VAT registered traders at all at present. Intention to make taxable supplies involves a bit more than a woolly "we will set something up some time".

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RLI
By lionofludesch
26th Sep 2016 12:16

On balance, I'd claim nothing at the moment and see how it goes.

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