Commentary

RCB/4/21 Partially exempt VAT registered businesses affected by coronavirus (COVID-19)

Part V16 Forms and other HMRC material

RCB/4/21 Partially exempt VAT registered businesses affected by coronavirus (COVID-19)

RCB/4/21 Partially exempt VAT registered businesses affected by coronavirus (COVID-19)

Revenue & Customs Brief, Issue 4. 23 March 2021

Purpose of this brief

This brief outlines an accelerated process for VAT registered businesses to request temporary alterations to their partial exemption methods (including combined methods) to reflect changes to their business practices because of the coronavirus (COVID-19) pandemic.

Who needs to read this

Partially exempt businesses whose trading activities have been affected by coronavirus, as a result of which their existing partial exemption method does not provide a fair and reasonable result.

Background

Businesses who make a mixture of taxable and exempt supplies can only recover input tax to the extent that it is used in making taxable supplies. Residual input tax (VAT incurred on purchases used to make both taxable and exempt supplies) must be apportioned using a fair and reasonable method to calculate the percentage which is recoverable.

The standard method, based on the value of taxable supplies made as a proportion of all supplies made by the business, is the default method. A Partial Exemption Special

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