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Is HMRC deliberately trying to narrow the scope of exemptions and zero-ratings in the VAT legislation?
KEY POINTS
- Are HMRC trying to increase tax collection by recategorising supplies as standard rated rather than zero rated or exempt?
- The department appear to be reviewing the interpretation of VATA 1994 Sch 8 and Sch 9.
- Three First-tier Tribunal cases in summer 2015 illustrate “tax by reinterpretation”.
- HMRC are entitled to consider whether exemptions and zero-rating apply if circumstances have changed.
- The department should publicise changes or confirmation of policy as soon as possible.
A fellow adviser recently asked me what I thought of HMRC’s strategy of increasing VAT yield by adopting a policy of “tax by reinterpretation”. My first reaction was one of surprise...
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