ESG: Regulations Summary

HMRC published a consultation document, "VAT and Value Shifting," in January 2021, consulting on proposed changes to the way the consideration for a bundle of separate supplies is apportioned for VAT purposes. Given concerns that the rules allowed for manipulation of the values assigned to the various elements of the bundle in order to achieve inappropriate VAT savings, the government proposed more stringent rules to prevent such manipulation.

Revenue and Customs Brief 2 (2023) has now announced that no legislative changes will be made. Instead, HMRC has concluded that the most effective way to address valuation concerns is to provide businesses with practical guidance on apportionment methods. This is through Guidelines for Compliance and improvements to other guidance.