When can Anchor reclaim VAT that we pay on purchases?

When the purchase is made for the purposes of making a taxable supply

The VAT rules here work the same for Anchor as for any other business that is registered for VAT. If the purchase is going directly into making a taxable supply (i.e. one that is subject to VAT at either 20%, 5% or 0%, rather than one that is exempt) then the VAT that we paid on that purchase can be reclaimed from HMRC. However, as the majority of the services that Anchor offers are exempt from VAT (care services and rental income are both exempt) then only a small percentage of the VAT on our purchases is reclaimable.