The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance examines a number of important issues related to partial exemption.
For an overview of partial exemption more broadly, see the Partial exemption ― overview guidance note.
For in-depth commentary on the legislation and case law, see De Voil Indirect Tax Service V3.460.
If a partly exempt business fails to recover input tax that it is entitled to in the correct VAT return period, then it can normally make a ‘belated’ claim for the input tax. There are time limits (or ‘capping rules’) on making this sort of claim and input tax cannot be claimed more than four years after the due date for the VAT return it should have been included on.
If the annual adjustment is not capped under the capping provisions, but earlier periods covered by the annual adjustment are affected, the business can use the annual adjustment to recalculate the amount of recoverable VAT for the longer period. However, if a business has made an error in an earlier period, it cannot use the annual adjustment to correct that error. The business must use the corrected figures when undertaking the annual adjustments; however, the VAT amount must not be adjusted. Please see the Annual adjustments (longer period adjustments) guidance note for more information.
Belated claims (whether made via an error notification or any other means) must be based on the partial exemption method in place at the time the input tax was incurred.
When making such a claim, the business should consider the knock-on effect on other input tax deducted in that VAT return period and the relevant longer period calculation. For example, if a business is using an inputs-based method and it makes a revision to either the taxable or total input tax values, this will alter the amount of residual input tax deductible. The business must also reconsider the de minimis position for the initial tax period and longer period
**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
Capital vs revenue expenditureExpenditure of a capital nature is not allowed as a deduction when calculating trading profits. Expenditure of a revenue nature is allowable, provided there is no specific statutory rule prohibiting a deduction and the expenditure also satisfies the wholly and
‘Bed and breakfasting’ was the pre-1998 practice of selling shares and repurchasing them the following day. This technique can still be used in a modified form to achieve capital gains tax (CGT) savings for current or future tax years using:•a spouse / civil partner•a self-invested pension plan
A time to pay arrangement, which may also be referred to as TTP in practice, is a negotiated agreement between HMRC and the taxpayer to allow for tax to be paid after its due date.The guidance in this note applies to individuals under self assessment and companies paying corporation tax. It does not
IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.