singular creature in the VAT world. Where a typical transaction gives rise to only one supply for VAT purposes a typical HP gives rise to two: one in relation to the asset; and the other in relation to the provision of finance. One is taxable and the other is exempt. This means that VAT incurred on the overheads of a typical HP is automatically attributable to both taxable and exempt supplies. Partial exemption is hardwired into its DNA.
