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Withdrawal of VAT exemption for business supplies of research: consultation

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The UK government has accepted the European Commission’s view that a VAT exemption for business research supplied between ‘eligible bodies’ does not comply with EU law. HMRC launched a consultation on 20 December on a plan to withdraw the exemption, set out in Group 6 of VATA 1994 Sch 9, with effect from 1 August 2013.

HMRC said it understands that the majority of research carried out in the UK is grant-funded and outside the scope of VAT. ‘Most of the remainder is taxable business research and so the amount of exempt research is understood to be very small. If this is right, the loss of this exemption should not have a significant impact on UK research but we hope responses to this consultation will clarify this one way or another.’

Comments are invited by 14 March 2013.

Issue: 1152
Categories: News , Indirect taxes , VAT