Commentary

BB/8B/99 VAT—the three-year cap and partial exemption

Part V16 Forms and other HMRC material

BB/8B/99 VAT—the three-year cap and partial exemption

BB/8B/99 VAT—the three-year cap and partial exemption

Business Brief, Issue 8. 31 March 1999

This Business Brief clarifies Customs' policy about how the three-year cap affects businesses' partial exemption position, illustrated by a number of examples.

Background

The purpose of the three-year cap is to provide certainty and stability for both the Exchequer and the taxpayer. The provisions are not intended to have any impact on the normal system of deduction and adjustments to deduction as set out in the VAT Regulations.

Any trader or business currently operating the partial exemption rules correctly will not be affected by the three-year cap. This also applies to businesses which discover a mistake and make the necessary correction within the three-year time limit. In other words, the three-year cap only affects businesses who do not claim the input tax to which they were

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