Special Method Override Notice

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Special Method Override Notice
  • Special Method Override Notice served by HMRC
  • Special Method Override Notice served by taxpayer
  • Effect of a Special Method Override Notice
  • Terminating the Special Method Override Notice
  • Appealing against a Special Method Override Notice

This guidance note provides an overview of the Special Method Override Notice (‘Notice’) which was introduced with effect from 1 January 2004. This legislation allows HMRC or a taxpayer to impose an immediate override on the results of an unfair special method until a replacement method has been agreed.

SI 1995/2518, regs 102A, 102B, 102C; De Voil Indirect Tax Service V3.462A (subscription sensitive); Notice 706 ; PE51000; Vision Express (UK) Ltd v Revenue and Customs Commissioners (2008) VAT Decision 20870 (subscription sensitive)

The override only affects partly exempt businesses that use a partial exemption special method where HMRC has:

  • served a Notice on the business (see under Notice by HMRC below)
  • approved a Notice served by the business (see under Notice by taxpayer)
Special Method Override Notice served by HMRC

HMRC can serve a notice to a taxpayer that a special method override will apply in relation to:

  • prescribed accounting periods starting on or after the date of the Notice (or from a later date)
  • part of a longer period which falls after the date of the Notice (or from a later date)

SI 1995/2518, reg 102A(1)–(2)

For the effect of the Notice, see below under Effect of a Notice.

When HMRC will serve a notice

HMRC has stated that it will normally only serve a special override notice in the following circumstances:

    More on Partial exemption: