This news release is issued to raise awareness of a change to partial exemption VAT treatment for businesses that supply goods on hire purchase agreements and similar contracts.
Following the publication of Court of Justice of the European Union (CJEU) judgment C-153/17 Volkswagen Financial Services (UK) Ltd, HMRC has outlined its recommended method for apportionment of VAT incurred on overheads. The method set out in the Brief is HMRC’s preferred one for the industry but is not compulsory and businesses can continue to apply any fair and reasonable partial exemption method already agreed.
Further details of the changes can be found in Revenue and Customs Brief 8/2020 or by contacting the Advice Centre.
