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Tax avoidance schemes

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HMRC has added Spotlight 38 to its targeted list of tax avoidance schemes. This concerns VAT supply splitting, where HMRC takes the view that a single supply of goods or services has been split artificially into separate supplies, giving a lower rate of VAT overall. It gives an example of such an arrangement where:

  • multiple suppliers are used even though the same elements could be provided by one supplier; and
  • the customer has no opportunity to decline to take one of the individual elements.

HMRC states that it won’t offer advice regarding VAT supply splitting, but will expect taxpayers to make their judgement based on published guidance (see