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HM Revenue and Customs Brief 06/09

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HM Revenue and Customs -Tax Authorities

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Issued 20 February 2009

Claims for retrospective application of Extra-Statutory Concession (ESC) 3.35

ESC 3.35 permits non-profit making membership bodies that supply a single package of benefits to their members to apportion their subscriptions to reflect the value and VAT liability of the individual benefits, without regard to whether there is one principal benefit.

A practical example is where the principal benefit of a membership subscription is standard-rated, but there are ancillary benefits which, if supplied in their own right, would be zero-rated and/or exempt. In such a case, the body may apportion the subscription to reflect the different elements, rather than treating the whole subscription as standard-rated.
HM Revenue & Customs (HMRC) is aware that some bodies have been using the ESC to rework previously submitted VAT returns, and have submitted claims for 'overpaid' VAT. In our view, the ESC may not be used to make retrospective adjustments, as such returns were correct in law. HMRC will therefore reject any such claims.

In some cases the claims have alleged 100 per cent zero rating, due to the principal benefit being zero-rated. Such cases will be given due consideration by HMRC, provided the claim is based on the application of the law, as opposed to retrospective use of the ESC.


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Crown Copyright 2009.

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Article Published/Sorted/Amended on Scopulus 2009-03-17 12:37:14 in Tax Articles

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