VAT Partial Exemption Changes Following Le Credit Lyonnais

In Brief 22/15 HMRC confirm changes to the VAT Regulations 1995 to ensure that UK law is aligned with EU law following the decision of the European Court of Justice (ECJ) in the case Le Credit Lyonnais (C-388/11). The changes take effect from 1 January 2016.

In Le Credit Lyonnais, the ECJ found that the VAT Directive could not be interpreted so as to allow a company to take into account the turnover of its foreign branches when calculating how much input tax it can deduct in the member state where it has its principal establishment, using a ‘single pot’ calculation. It also found that a sector in a partial exemption method could not be based on a geographic location. To reflect that decision, the March 2015 Budget announced proposals to exclude supplies made by overseas branches from partial exemption methods. As a result of feedback on the subsequent consultation, HMRC have narrowed the scope of changes, which are now set out in Brief 22/15.

Brief 22/15 can be found at www.gov.uk/government/publications/revenue-and-customs-brief-22-2015-changes-to-vat-regulations-following-judgment-in-the-case-of-le-credit-lyonnais-c-38811/revenue-and-customs-brief-22-2015-changes-to-vat-regulations-following-judgment-in-the-case-of-le-credit-lyonnais-c-38811.

News / Blog

19th
July

Understanding Bridging Loans

A rather common question that is asked by many who are new to the concept is, “What exactly can you…

5th
July

Five things to Consider before Applying for Development Finance

This week, we shall be discussing the five important questions you will need to ask yourself before choosing to give…

31st
May

The Rise of the Flexible Workspace

As we are living in a society that is forever changing, business workspaces are equally subject to change as well.…

31st
May

Planning an Exit Strategy for your Small Business

If you own a small business, or you own shares in someone else’s small business, it is likely that you…