The way special VAT situations are handled has changed in the last year or so - I don’t think you have to allow exempt on a per client basis any more, just expand the additional vat options section at the bottom of the invoice editor and tick the appropriate box.
This seems a more sensible way around to me since whether a particular sale is exempt depends on what you’re selling, not on who you are selling it to.
This post gives a good explanation of when to use each option and the effect it has on your VAT return. In particular note that VAT exempt sales should still be included in box 6.