Explanatory note

These Regulations, which come into force in accordance with regulation 1, amend the Value Added Tax Regulations 1995 (S.I. 1995/2518) (“the principal Regulations”).

Regulation 3 amends regulation 101 of the principal Regulations (the partial exemption standard method) so as to restrict the degree of rounding up of the recoverable percentage of residual input tax in the case of larger businesses.

Regulation 4 amends regulation 102 of the principal Regulations (use of other methods) by adding new paragraphs (5) to (8).

New paragraph (5) provides that approvals given or directions made by the Commissioners must be in writing.

New paragraphs (6) and (7) provide for a use based method of attribution of input tax where neither the approved or directed method nor any of the principal Regulations specifies a method of attribution. New paragraph (8) provides that, where a method makes partial provision for the attribution of any input tax, only such part as is not covered by the method shall be attributed on the basis of use.

A full regulatory impact assessment of the effect that this instrument will have on the costs of businesses is available at www.hmce.gov.uk.