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Calculating the exempt input tax recovery for the previous four years
We have been appointed to act for a client who is partially-exempt for VAT purposes. Since our initial review it has come to light that exempt input tax has never been recovered even though the annual amounts (and in most cases the quarterly amounts) fell below the £7 500 per annum (£1 875 a quarter) de minimis threshold.
We accept that we can go back only four years from the due date of the current VAT quarter ending 31 May 2015 namely to that ended 31 May 2011. However the annual adjustment is performed on the May VAT return each year being the VAT return quarter that ends on or after 31 March.
Our question is whether we could use the incorrect annual adjustment of 31 May 2011 to go back to 1 June 2010.
At first it looks promising: VAT Notice 706: Partial...
