How to get certainty on significant business tax issues
HMRC have just announced that they have extended the clearance service they gave to large businesses to all businesses. This means that VAT registered businesses can obtain a ruling on a transaction in advance so that they know what the correct VAT treatment should be, and will help them avoid VAT errors.
How long to get an answer?
HMRC have said they will attempt to provide clearances within 28 calendar days.
This time limit is referred to differently in the two documents that HMRC have issued. The initial note says:
respond within 28 calendar days, as the norm
Whilst the main paper says:
within 28 days as the norm
This difference is important as if they mean 28 calendar days, that’s a mere four weeks. So, for example, if you wrote today, 1 April, you could expect to get an answer by the end of April or early May. On the other hand, if they mean 28 working days, the answer could be expected to arrive mid to late May.
HMRC have been asked to clarify the point, and make both pages read the same way.
How to get a clearance
The paper goes into how to get a clearance and what has to be provided.
One thing is clear: there has to be a material uncertainty of commercial significance to the business itself which will be determined by reference to the scale of the business and the impact of the issue upon it.
This is rather different to the old rules for VAT. Now it is clear that if the impact of getting the VAT wrong on a particular transaction or series of transactions would have a significant impact upon the business it is acceptable for the business to seek a clearance as to the correct VAT treatment.
If you want to see the papers issued by HMRC they are available on its website. The first paper can be found here, and the second here.
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