We have received reports that HMRC have been taking a very long time to respond to taxpayers’ applications for new PE Special methods, and that in many cases, the proposals are rejected, sometimes with a comment that “any special method must guarantee a more fair and reasonable result than the standard method” and concluding that any uptick in recovery means that this condition is not met.

Clearly this is problematic for charities and their advisers who want to ensure that they are able to recover the right amount of VAT in line with the VAT legislation and regulations. A possible consequence of HMRC’s approach is that charities are not able to recover the correct amount of VAT, and that they incur excessive professional fees. It is also unlikely that charities will resort to taking their case to the VAT Tribunals, even where the case is strong, because of the necessary investment in more professional fees and inevitable impact on management time.

CTG would like to discuss this position with HMRC policy. However, our past experience of doing this indicates that we can achieve change where we have specific examples to share with HMRC. If you are interested in sharing your experience, whether as an adviser or a charity, please get in touch with CTG. You can either put your example(s) into the email, or you can express an interest in joining a call sometime in the next month which will be hosted by CTG.