VATupdate

Share this post on

HMRC internal manual: VAT Valuation Manual

Sometimes a single monetary consideration may be the payment for two or more supplies of different liabilities. In such a situation, the trader is required to allocate a fair proportion of the total payment to each of the supplies. This requirement is contained in VAT Act 1994, Section 19(4).

“Where a supply of any goods or services is not the only matter to which a consideration in money relates, the supply shall be deemed to be for such part of the consideration as is properly attributable to it.”

Although that section requires an apportionment of the consideration to be performed, it does not prescribe the methods by which this is to be achieved. The commonest methods are based upon the costs incurred in making the supplies or the customary selling prices of the supplies.

Examples of methods that have been found to be of general application are contained in HMRC Notice 700 (HMRC website). A trader is not obliged to adopt any of these suggested methods and you can accept alternative proposals provided that they achieve a fair result that can be supported by valid calculation.

Some sectors have special methods called “margin” schemes to determine apportionment of the monetary consideration. Details of these found in their notices and guidance. The schemes include:

Source gov.uk

Sponsors:

VAT news
VAT news

Advertisements: