On 26 June 2017, HMRC published guidance on its approach to situations where supply splitting is considered to have taken place.

HMRC views all VAT supply splitting arrangements that have been designed to reduce the amount of VAT owed as tax avoidance. It has confirmed that it will continue to challenge such arrangements.

Businesses who believe they may be supply splitting should review their arrangements and take appropriate action.

A copy of Spotlight 38 is available to view here.