Value shifting consultation update

HMRC has published its conclusions and actions taken following the VAT and value shifting consultation. The department has decided that rather than make legislative changes the most effective way to address valuation concerns is to provide businesses with practical guidance on apportionment methods.

As a result HMRC intends to publish a new guideline for compliance entitled ‘Help with VAT apportionment of consideration’ outlining its recommended approach to apportionment and helping businesses understand approaches HMRC considers as increasing or lowering tax compliance risk.

In addition it will make amendments to other guidance. This includes minor amendments to VAT Notice 700 section 31 ‘Apportionment of output tax' covering two basic methods of apportioning output tax – one based on selling prices the other based on cost values. VAT Valuation Manual para VATVAL03000 ‘Apportionment of monetary consideration’ has also been updated. These changes...