HMRC have published a summary of responses to their consultation  'VAT and value shifting' which took place earlier this year. 

The Consultation invited views on a proposed revision to the rules for apportioning consideration between supplies with mixed liabilities in a single transaction. 

  • Current legislation is non-prescriptive which HMRC says allows some businesses to pay less VAT by apportioning more consideration to non-standard rated items. 

Seven responses were received, largely from representative bodies. This resulted in responses focusing on the impacts of the proposals rather than giving specific answers to the largely business-based questions. 

Generally: 

  • There were mixed feelings about the proposed legislation.
  • Most respondents felt the proposed changes would increase complexity and place additional administrative burdens on businesses.
  • Some respondents commented that they have not seen sufficient evidence that value shifting occurs on a scale to warrant the proposed changes.

HMRC will now use the responses to further evaluate the issues and consider the scope of the proposed changes. 

The views of parties who may have missed the deadline to respond to the consultation are still welcomed by HMRC. 

Useful guides on this topic

Mixed supplies: Single or Multiple supply?
Is a mixed supply a single or multiple supply for VAT purposes? What tests and case law apply?

Consultation: VAT and value shifting
HMRC have opened a new consultation 'VAT and value shifting' inviting views on a proposed revision to the rules for apportioning consideration between supplies with mixed liabilities in a single transaction. 

External links

VAT and value shifting: summary of responses


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