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HMRC internal manual

VAT Partial Exemption Guidance

Other Partial Exemption issues: changes in intention or use: abortive costs

Where input tax is attributed either to an intended taxable supply or to an intended exempt supply and, in the event, the supplies are aborted, the initial attribution of input tax stands and no adjustment is possible. However, where the goods and services are used to make some other supply (e.g. where the original intention is to make taxable supplies but, the goods and services are used in making exempt supplies or vice versa) an adjustment under regulations 108 or 109 will be required.