In last month’s update we reported (click here) that new regulations had been made (the Value Added Tax (Amendment) Regulations 2014) on the VAT treatment of refunds made by manufacturers as part of a chain of supply. These Regulations came into force on 1 April 2014.
HMRC has now published Information sheet 03/14, which explains HMRC’s policy on the application of the new Regulation.
Although HMRC does not prescribe the form of records to be kept to allow for a VAT adjustment, they should be “sufficient to enable HMRC to verify that the VAT credit has been correctly claimed”, and “credit notes should not be issued”.
Manufacturers who have made refunds covered by the new legislation, but who have not previously adjusted their VAT, may now do so. HMRC notes, however, that there are a number of cases pending that deal with historical claims and time limits, and anticipates it may need to issue further guidance on this point.
To read the information sheet click here