If the input VAT, that is assigned (each directly and through the residual calculation) to exempt provides, is below the de-minimis limit, then all the input VAT incurred therein quarter is recoverable.
In order to be below the de-minimis limits, you must follow these two conditions:
- Input VAT attributed to exempt supplies must not exceed 1,875 pounds for the quarter
- Input VAT attributed to exempt supplies must not exceed 50% of the total input VAT incurred in that quarter
Finally, this enables up to 7,500 pounds value of input VAT, regarding exempt supplies which might not rather be recoverable, to be regained every year by a partially exempt business.