Commentary

V6.102 Revenue authorities' response to change

Part V6 Business by business

V6.102 Revenue authorities' response to change

V6.102 Revenue authorities' response to change

It is not only business organisations which have to deal with complex issues that give rise to specialisation and rapid change. With the increasing globalisation resulting from the increasing use of the Internet, tax authorities worldwide have become concerned with the protection of what they perceive to be their revenues. The result is that frequent new legislation is introduced in an attempt to prevent fiscal loss. An example of such an action is the adoption by the EU of revised place of supply rules for services. These revised rules largely came into effect on 1 January 2010 but certain changes took effect in subsequent years.

Recent years have also seen a step up in the attempts by HMRC to counter what they perceive as tax avoidance.

One example is the introduction of the “partial exemption override'” (V3.461A, V3.462A). For partly exempt businesses using the standard partial exemption method, this imposes a requirement to apply a use-based method if the standard method is not “fair and reasonable” or (in the case of a special method) where HMRC direct. Another such example is the requirement for a business to state that its proposed partial exemption special method fairly and reasonably represents the extent to which goods and services are used or are to be used by him in making taxable supplies. The main impact of this change is likely to be on businesses in the banking and securities, charity, education and insurance sectors, but this is not exclusively

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