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Sir is there any specific incentive/advantage to supply exempt goods? Because it seems strange why someone would be willing to pay an input VAT without having the right to claim it back, unless of course he is gaining from the trade.
It is not a question of advantage! An individual makes a business decision based on the ability to make a profit and must simply factor in that exempt supplies made will mean that any standard rated costs or expenses incurred will be 20% higher.
You need to stop making up questions about “why” and focus upon what “is”! The rules are set and you need to learn them and know how to apply them – that is where your time must be spent in order to succeed in this exam!
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