The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This note provides an overview of the rules regarding partial exemption annual adjustments or longer period adjustments. This note should be read in conjunction with the Partial exemption standard method and Partial exemption special methods guidance notes.
A business will normally be required to undertake a partial exemption calculation each VAT return period in order to provisionally determine the amount of recoverable input tax incurred during that period. At the end of the tax year (or other longer period), the business will be required to redo the partial exemption calculation using the figures for the whole tax year / longer period in order to calculate the actual amount of recoverable input tax for the whole period. The annual adjustment also allows the business to:
review the actual use of the goods and services over the longer period
review whether the exempt input tax incurred over the longer period was under the de minimis limit
Under normal circumstances, the annual adjustment covers a business’s tax year but in certain instances, it will cover a different longer period which is shorter than 12 months.
A tax year is a 12-month period and normally ends on the 31 March, 30 April or 31 May depending on the VAT return periods allocated to the business. For businesses that render monthly VAT returns, their tax year ends on the 31 March.
Many businesses elect to have a VAT return stagger that matches their financial year-end. HMRC will normally agree to change the VAT return periods if there is no evidence that the request to change the VAT return periods is intended to minimise the effect of a change in VAT liability, with a view to applying a more favourable de minimis limit, or will result in an unfair recovery
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
Normal due dateIndividuals are required to pay any outstanding income tax and Class 4 National Insurance, Class 2 National Insurance, and capital gains tax due for the tax year by 31 January following the end of the tax year (ie 31 January 2021 for the 2019/20 tax year). From 6 April 2020, UK
The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the interest expense is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are
The rent-a-room scheme was introduced in the early 1990s to encourage homeowners to take in lodgers.Fundamentally, the rent-a-room scheme is a relief which means that the rent received by an individual from a lodger (up to a prescribed limit) can be exempt from income tax. If the gross rents are
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.