HMRC has announced changes to The VAT Regulations 1995, to ensure that UK VAT law complies with EU law following the ECJ’s decision in Le Credit Lyonnais (Case C-388/110).
Regulations 101, 102 and 103, have been amended and exclude supplies made by overseas branches from partial exemption methods. The operative changes are effective in relation to any method or VAT prescribed accounting periods on, or after, 1 January 2016.
HMRC is expected to update its guidance shortly to reflect these changes. However, it is expected that only a minority of businesses will be affected, since most businesses that make supplies from overseas establishments use a special method that is already compliant with the new legislation.
Brief 22/115 is available to view here.