VAT and value shifting

This consultation seeks views on a proposed revision of the rules for apportioning the consideration between supplies with mixed liabilities in a single transaction.

The current law in section 19(4), Value Added Tax Act 1994 (VATA 94) is non-prescriptive and some businesses pay less VAT by apportioning more consideration (or ‘shifting the value’) to non-standard rated items.

Although the broad principles of the new rules are set, businesses can:

• comment on how these can be written into UK law
• draw attention to any issues the new rules present
• highlight whether greater clarity is required in some areas

Businesses are also invited to suggest other ways to tackle value shifting.

This consultation will be of particular interest to businesses that sell goods or services for a reduced price as part of a package or ‘bundle’.