Exemption from VAT applies to a supply if it is within one of the groups of VATA 1994, Sch. 9 (VATA 1994, s. 31).

A group’s name is merely for ease of reference and does not affect the interpretation of a group’s items (VATA 1994, s. 96(10)). Although most advisers know the highlights, there is no substitute for considering the detailed conditions in a group’s items and notes (VATA 1994, s. 96(9)).

If exemption applies to a supply, no VAT should be charged by the supplier, but generally, any underlying input VAT is not recoverable from HMRC. The VAT cost to the customer (consumer) is cut, but in effect not eliminated.

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