HM Revenue and Customs Brief 06/09
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Issued 20 February 2009
Claims for retrospective application of Extra-Statutory Concession (ESC)
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
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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Article Published/Sorted/Amended on Scopulus 2009-03-17 12:37:14 in Tax Articles