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Research and development

HMRC has issued Business Brief 21/13 VAT: withdrawal of the VAT exemption for supplies of research between eligible bodies.  

It relates to the transitional arrangements for supplies of business research where the written contract was entered into before 1 August 2013, whether or not work has already commenced. The exemption will continue to apply to services within the scope of the contract. It also discusses the withdrawal of the exemption for all new contracts.

HMRC has also issued VAT Information Sheet 11/13 VAT: supplies of research between eligible bodies.

It provides guidance on when the provision of research between eligible bodies may still be treated as exempt from VAT. 

Tax schemes

HMRC, as part of its ‘Spotlights’ updates, has issued warnings on two types of tax scheme:

  • non-profit-making bodies schemes to obtain VAT exemption for sporting or educational/training supplies
  •  business premises renovation allowances schemes.

The non-profit-making bodies schemes are based on exemptions for VAT that are available where certain sporting and educational/training supplies are provided by a non-profit-making body. The schemes are not new and generally profits made via the scheme are extracted from the non-profit-making body by an associate of the non-profit-making body. HMRC states that it will continue to pursue users of schemes that use this method of extraction of profits.

Business Premises Renovation Allowances (BPRA) support the regeneration of deprived regions of the UK. They allow investors to claim a tax allowance for 100% of the amount they invest in converting or renovating empty business premises. HMRC has highlighted that there are a number of schemes based on this relief and it is undertaking a technical review that will look at ways to stop manipulation of BPRA. Further details are available. 

Updated HMRC Notices 

VAT Notice 700: The VAT guide

This notice replaces the May 2012 version and includes these changes and amendments to a number of sections of the guide:

  • clarification of when you can rely on advice from HMRC
  • an update on the changes to registration of Non-Established Taxable Persons
  • an update, including examples, to take account of changes to VAT invoicing requirements
  • a rewritten section 29 zero-rating, reduced-rating and exemption. 

VAT Notice 700/45: How to correct VAT errors and make adjustments or claims

This notice applies now and replaces the October 2012 version. It highlights and explains the treatment of errors and adjustments, with examples.

VAT Notice 700/62: Self-billing

This notice applies now and replaces the December 2003 version. In the notice it is highlighted that the changes ‘reflect the changes to the rules for VAT self-billing introduced by Council Directive 2010/45/EU, in particular – the requirement for VAT self billed invoices to include the reference “SELF BILLING”’.

Customs Notice 275: Customs export procedures

This notice applies now and replaces the January 2013 version. It brings the customs export procedures into one area.

Article contributed by ACCA