Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

PBR: Minor VAT changes, not many harmed. By Nigel Harris

by
6th Dec 2006
Save content
Have you found this content useful? Use the button above to save it to your profile.

The PBR is not normally the place to announce any major VAT changes and this year was no exception.

We were expecting a couple of announcements on partial exemption following the consultation announced in the Spring 2006 Budget. The first change should allow HMRC to approve special partial exemption calculation methods more quickly, and improve what it describes as “fairness and equity by helping to ensure that all businesses recover a fair and reasonable amount of VAT.” From 1 April 2007 a business wishing to use a special method will be required to declare ‘to the best of its knowledge and belief’ that its proposed special method is fair and reasonable. HMRC will then have the power to set aside a method if the person signing the declaration knew or ought reasonably to have known that is not fair and reasonable. The business would then have to recalculate past returns to ensure that it only recovered a fair and reasonable amount of VAT.

The second change, also effective from 1 April 2007, will help some partially exempt businesses that make overseas supplies. They will be able to apply for a ‘combined method’ that caters for the recovery of VAT on overseas supplies that confer the right of input tax deduction (for example, supplies of finance and insurance made to customers outside the European Union).

The onlty other VAT proposal this Autumn is simply a tidying up of an aspect of transfers of a going concern (TOGC). From the date on which Finance Bill 2007 receives Royal Assent the seller of a business transferred under the VAT TOGC rules will keep the business records, except in the few cases where because the buyer retains the seller's VAT number it is essential for VAT compliance purposes that the records are passed over. The information that must be passed to the buyer will in future be set down in the law. This measure is designed to bring VAT record keeping requirements for businesses transferred as a going concern into line with other tax & regulatory regimes.

Tags:

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.