(August 25, 2015)
On August 25, 2015 on GOV.UK an updated version of HMRC VAT Partial Exemption Toolkit was published (however the document itself states that it was published in July 2015). According to the document, the toolkit is aimed at helping and supporting tax agents and advisers in completing VAT Returns on behalf of their clients.
The subjects discussed in the document include a.o.:
· Areas of risk within VAT partial exemption
o Record keeping
o Recognition of the need for a partial exemption calculation
o Attribution
o Apportionment
o The annual adjustment
o Changes of intention
o Capital Goods Scheme
· Checklist for VAT partial exemption
· Explanation and mitigation of risks
o Recognition of the need for a partial exemption calculation
1. If exempt supplies are made or intended, has the need for a partial exemption calculation been recognised?
2. Has the VAT liability of existing and intended supplies been correctly identified?
3. Have any necessary adjustments for private or non-business use and other restrictions been made before the partial exemption calculation is carried out?
o Attribution
4. Has input tax been attributed correctly to taxable, exempt and residual use?
o Apportionment
5. Has the correct partial exemption method been used?
6. If a special method has been approved, has it been followed?
7. If residual input tax has been identified, has it been apportioned correctly to taxable and exempt use?
8. Have the correct supplies been included in the apportionment calculation?
9. Does the amount of exempt input tax exceed the de minimis limit?
o The annual adjustment
10. Has the annual adjustment been calculated correctly?
11. Has the need to apply the standard method override been considered?
12. Where there has been a change of use or intended use, has the initial attribution been adjusted to reflect this?
13. If credit notes have been issued or received, have any necessary partial exemption adjustments been made?
14. If input tax has been claimed late, have any necessary partial exemption adjustments been made?
15. Have bad debt relief adjustments been correctly treated?
o Capital Goods Scheme
16. Has the need for Capital Goods Scheme adjustments been considered?
17. Have Capital Goods Scheme adjustments been calculated correctly?
18. If a Capital Goods Scheme item has been sold or otherwise disposed of within its adjustment period, have any necessary adjustments been made?
Click here to be forwarded to the July 2015 version of the HMRC VAT Partial Exemption Toolkit as available on GOV.UK, which will open in a new window.
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