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HMRC internal manual

VAT Partial Exemption Guidance

Partial Exemption (PE) basics: introduction


Scope of this guidance

Our books of guidance are the main reference material for people in the Department. All HMRC formal procedures and work systems are outlined in these books, which give managers and staff the Department’s rules and guidelines and general advice on interpreting them. The guidance is aimed at HMRC staff and should not be relied upon by businesses in calculating their taxes and duties.

This guidance should be read in conjunction with Notices 706 Partial Exemption and 706/2 Capital Goods Scheme. It does not attempt to repeat what is covered there but rather to address further areas. It covers most areas of partial exemption and the Capital Goods Scheme.

As partial exemption is a mechanism in the calculation of deductible input tax, rather than a trade sector or liability related subject, it has overlaps and interactions with many other parts of guidance. If, having looked in this and other parts of the guidance, you are unable to find the answer to any queries then further assistance is available as set out below.

Partial exemption in the Department: Roles and responsibilities

There is a national network of resources available to help resolve PE queries and assist in visiting PE businesses and negotiating PE methods. It will help to ensure that resources are available when needed if requests can be made as early as possible but every effort will be made to provide help whenever it is requested. These resources are:

Title Function
PE & Business/ Non business Unit of Expertise There is a national resource PE Unit of Expertise based in Trinity House, Oxford. Its officers will respond to queries by phone, E-mail or written submission.
  Full answers will be promptly given whenever possible and queries that require policy input will be passed on appropriately.
  The UoE acts as a conduit for information dissemination to and from the policy team in the Indirect Tax Directorate. UoE members will attend meetings or assist in training events nationally as required.
  The UoE also has a web page with their phone numbers and other helpful resources.
Other UoEs As PE is a wide-ranging topic other UoEs will be good resources in many cases. Other UoEs that may be able to provide useful assistance include those for Land & Property, Finance and Education.
TAPE teams There is a national network of TAPE (Tax Avoidance and Partial Exemption) teams. Resources from these teams can be called on for help in assuring partly exempt businesses.
PESOs The PE network also contains a further national resource, the Partial Exemption Specialist Officers (PESOs). They are available to assist when required with PE matters particularly at the largest and more complex businesses. For example, they can help with the preparation of applications to D&FS Policy Team for the use of PE legal powers (See PE52000)
  Major voluntary disclosures in the PE area can be referred to them for assistance and advice.
Indirect Tax Directorate Policy responsibility for PE rests with Deductions and Financial Services (D&FS) Policy team in 100PS, London. Any queries that this guidance does not provide answers to, and the above resources have not assisted with, should be referred through the Indirect Tax Directorate VAT Advisory Team in the normal way.
  In conjunction with the D&FS team, the UoE publishes internally the Partial Exemption Newsletter (PEN) when there is sufficient material to justify this. Back copies of this can be obtained from the D&FS web site.