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Talking Points 28/20 and 29/20: KPMG’s weekly indirect tax news update

Talking Points 28/20 and 29/20: KPMG’s weekly indirect

Read Talking Points to keep up to date on recent Indirect Tax developments.

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Talking Points is a weekly newsletter covering recent developments in Indirect Tax. We will highlight the most significant items in Tax Matters Digest so readers are aware of issues that may be relevant and can read on for more details where applicable. In the last two editions we covered: an update to Revenue and Customs Brief 8 (2020): change to partial exemption VAT treatment for hire purchase (HP) supplies; VAT Grouping - Establishment, Eligibility, and Registration Call for Evidence; and a Treasury paper on VAT and the Public Sector: Reform to VAT Refund Rules.

27 August 2020 | Issue 28/20
This week’s edition reports on an update to Revenue and Customs Brief 8 (2020): change to partial exemption VAT treatment for HP supplies. The update to the section 'HMRC position' aims to confirm that where the amount of credit is less than the total value of the asset, then both the amount shown as value of the asset and value of the exempt credit would be reduced. This emphasises the importance of distinguishing between the value of the credit granted (which is the capital that is lent), and the consideration for the credit, (which is the interest charged and any other fees). The value of the asset for the purpose of this overhead recovery calculation is not the actual selling price, but an amount equal to the capital amount that is financed.

3 September | Issue 29/20
This week’s edition begins with HM Treasury’s call for evidence about VAT grouping, looking at the topics of establishment, compulsory VAT grouping and grouping eligibility. In particular the paper considers the application of ‘establishment only’ provisions in the UK, which are used in most other countries. Under ‘establishment only’ provisions, where an entity has fixed establishments in multiple jurisdictions, it is only the establishment in the country in which the VAT group is based that can be part of that VAT group. In terms of eligibility, the paper considers the issue of the inclusion of certain partnerships in groups. The edition finishes with the Treasury paper entitled ‘VAT and the Public Sector: Reform to VAT Refund’ which proposes full VAT refunds for Government bodies who currently can only claim non-business VAT if it is incurred on certain contracted out services.

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