Registered social landlords |
Address
The Pre Budget Report announced that the changes to the partial exemption special method regime proposed in the 2006 Budget will come into effect on 1 April 2007.
Under these proposals taxpayers are required to sign a declaration that any proposed special method is ‘fair and reasonable’ before HM Revenue & Customs (‘HMRC’) will give approval for its use.
Previously HMRC would have approved a partial exemption special method without such a declaration being signed by a taxpayer. The new declaration procedure means that, if at any time HMRC find a “fair and reasonable” declaration made by the taxpayer to be incorrect, they can serve a notice to override the partial exemption method from its effective date (subject to the three year cap).
This will apply to all methods agreed with HMRC on or after 1 April 2007. This means businesses that have not concluded their negotiations with HMRC regarding the operation of a partial exemption special method before 1 April 2007 will be required to make this declaration (as well as those businesses that begin the process after 1 April 2007).
In respect of what is ‘fair and reasonable’, in many cases there is likely to be a range of possible methods that will provide a fair and reasonable result. The taxpayer must then consider objectively whether a method is fair and reasonable even where HMRC have previously consented to, or opposed, the use of similar methods.
For further information, download our publication below.
Registered Social Landlords
(194.37 KB)
