Commentary

BB/12B/01 VAT partial exemption—supplies to be excluded from the standard method calculation

Part V16 Forms and other HMRC material

BB/12B/01 VAT partial exemption—supplies to be excluded from the standard method calculation

BB/12B/01 VAT partial exemption—supplies to be excluded from the standard method calculation

Business Brief, Issue 12. 11 September 2001

This business brief provides further clarification of Customs and Excise policy previously outlined in Business Brief 8/99 following the House of Lords decision of 23 May 2001 in the Liverpool Institute of Performing Arts (LIPA) case ([1999) STC 891 [Part V10]).

What was the LIPA case about?

The LIPA case was about the scope of the partial exemption “standard method” (as described by reg 101 in VAT Regulations, SI 1995/2516 [see Simon's Weekly Tax Intelligence 1995 p 1464]) and what supplies should be included in it. Customs argued that the “standard method” calculation determines the deduction of VAT relating to supplies made within the UK and does not determine the deduction of VAT relating to supplies made outside the UK.

What did the House of Lords decide?

The House of Lords agreed with Customs. It found that two separate regimes exist, under the VAT Regulations 1995, for determining the amount of VAT that a taxpayer can deduct—

  1.  

    —     regulation 101 (the “standard method”) which determines the deduction of VAT relating to supplies

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial