Commentary

BB/14A/05 VAT—disclosure of VAT avoidance schemes—changes to the rules

Part V16 Forms and other HMRC material

BB/14A/05 VAT—disclosure of VAT avoidance schemes—changes to the rules

BB/14A/05 VAT—disclosure of VAT avoidance schemes—changes to the rules

Business Brief, Issue 14. 28 July 2005

Changes to the VAT disclosure rules announced in the Budget (see Budget Notice CE06/05 (BN/6/05, Division V16.3)) will come into force on 1 August 2005.

This Business Brief describes the changes to the rules. It also clarifies the application of the existing “confidentiality” hallmark.

The existing rules

The existing rules require taxable persons to notify the use of either of two types of VAT scheme to HMRC. Taxpayers with an annual turnover exceeding £600,000 must notify the use of certain schemes described in the legislation (“listed schemes”). Taxpayers with an annual turnover exceeding £10 million must notify the use of schemes that contain features associated with avoidance (“hallmarked schemes”), if one of the main purposes of entering the scheme is to gain a VAT advantage. If the taxpayer is part of a corporate group, these turnover figures are those for the whole group.

The changes

There are three main changes to the rules. First, two new listed schemes are added—

  1.  

    —     cross-border face-value voucher schemes involving telecommunications, broadcasting or electronically supplied services. These schemes attempt to avoid paying any VAT on the provision of the services to final retail customers within the UK; and

  2.  

    —     the surrender or termination of certain taxable leases of buildings, where the tenant remains in occupation of essentially the same area of the

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