The Value Added Tax (Amendment) (No. 2) Regulations 2009

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations, which come into force in accordance with regulation 1, amend Part XIV (input tax and partial exemption) of the Value Added Tax Regulations 1995 (S.I. 1995/2518).

Regulation 3 amends regulation 99 (interpretation of Part XIV and longer periods) to add a reference to regulation 101 into the definition of “exempt input tax”.

Regulation 4 amends regulation 101 (attribution of input tax to taxable supplies). It revises the method of calculating input tax which is to be attributed to taxable supplies in any prescribed accounting period, allowing attribution to be made on the basis of use or by reference to the recovery rate which applied for the immediately preceding longer period in specified circumstances and subject to specified conditions. It also clarifies the meaning of “taxable supplies” in regulation 101, makes provision to avoid distortion and sets out some new definitions.

Regulation 5 makes a minor consequential amendment to regulation 102 (use of other methods).

Regulations 6 and 7 amend regulations 103 (attribution of input tax to foreign and specified supplies) and 103B (attribution of input tax incurred on services and related goods used to make financial supplies) to make it clear that they no longer apply to input tax attributed under regulation 101.

Regulation 8 amends regulation 107 (adjustment of attribution). It revises the method of calculating any adjustment which is required to be made to the amount of input tax provisionally deducted in any longer period to ensure consistency with the changes made to regulation 101. It also allows any over-declaration or under-declaration to be included in the last prescribed accounting period of a longer period as an alternative to the first prescribed accounting period next following a longer period and makes provision as to the period in which the adjustment is required to be made where no adjustment is made.

Regulation 9 amends regulation 107B to make it clear that it no longer applies to input tax attributed under regulations 101(8) or 107(1)(b) and (c). It also makes amendments consequential on the changes made to regulation 107.

Regulation 10 adds a new regulation 107F to clarify what the references to an apportionment under regulation 101(2)(d) in relation to a longer period include.

A full Impact Assessment of the effect that this instrument will have on the costs of business and the voluntary sector is available from H M Revenue and Customs, 100 Parliament Street, London SW1A 2BQ and is annexed to the Explanatory Memorandum which is available alongside the instrument on the website of the Office of Public Information at www.opsi.gov.uk.