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Exempt supply in the Insurance industry

partial exemption applies on the recovery of input tax but what about outputs unrelated to insura

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We are an insurance Managing General Agent supplying worldwide and as such we are VAT registered and reclaim input VAT under the partial exemption rules. This is fine however in the last quarter we received a large rebate connected to a photocopier contract renewal that included VAT. On that basis, do I have to declare all of the output VAT applicable on the rebate and offset it against the input VAT claim or will this also be subject to the same proportion applied to the inputs?

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By paul.benny
01st Apr 2019 15:08

You're overthinking this one. In effect the rebate is because you were 'overcharged' by your supplier. So the VAT is a negative input tax and is subject to the same restrictions as your normal recovery.

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01st Apr 2019 15:12

I agre with Paul

As the rebate is a refund of the photocopier expense, the rebate should be treated like a purchase credit note reducing the input tax rather than increasing the output tax.

The reduced input tax then goes into the partial exemption calculation.

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