Exempt supplies — registration and input tax

An accountancy firm advises a new client who provides private healthcare services that are exempt supplies for VAT purposes. In its first year the client expects taxable turnover of nil and exempt turnover of £400,000. The client buys office equipment and pays VAT of £8,000 on those purchases. The client's owner asks whether the business must register for VAT and whether it can recover the £8,000 of VAT it has paid. Which of the following best states the position?