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VAT recovery changes

VAT refund scheme for certain charities

All charities providing palliative care or medical courier services will benefit from a new scheme which allows the VAT incurred on purchases to be recovered. It will have effect in relation to supplies made on or after 1 April 2015.

Where the charity provides services free of charge because the cost is met from voluntary donations and public funding, VAT will no longer be a cost. 

VAT deductions relating to foreign branches

Under the current rules, UK partly exempt businesses can recover VAT on their overhead costs where they are supporting foreign branches. Potentially a business might be able to over allocate those overhead costs to its non-EU foreign branches. If you supply exempt financial services or are a financial institution such as a bank or insurer, with branches both within and outside the UK, this change is likely to affect you. 

Supplies made by the foreign branches will no longer be taken into account when calculating the apportionment on overhead costs. This only affects partly exempt businesses and subject to transitional rules for longer VAT accounting periods will be effective from 1 August 2015.



Date: 19th March, 2015
Author: Nick Igloo


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