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HMRC internal manual

VAT Civil Penalties

Breach of VAT Regulatory Provisions: Why a penalty arises: Regulatory breaches - Partial exemption

Regulation Failure
Reg 107 (1) Section 69 (1) (d) …to adjust provisional attribution of input tax on the next return where all exempt input tax cannot be treated as attributable to taxable supplies.
Reg 107 (2) Section 69 (1) (d) …adjust provisional attribution of input tax on the next return where all exempt input tax can be treated as attributable to taxable supplies.