23 July 2019 
Andrea Marshall, Tax Specialist
HMRC has opened a call for evidence on the simplification of partial exemption and the Capital Goods Scheme, which will be welcomed by many universities. This call for evidence follows the findings of the 2017 Office of Tax Simplification (OTS) VAT Review which BUFDG members contributed to, including quite a detailed discussion with the OTS about partial exemption and the CGS in a 2017 tax conference session.
The HMRC call for evidence includes 28 questions as follows:
1. Does your business use a PESM? If so, what was your experience in getting the PESM approved?
2. How long did the approval process take?
3. Do you find the administration involved with PESMs challenging?
4. Would allowing businesses to apply PESMs without seeking approval improve the system? Please give reasons for your answer.
5. Would there be issues created by removing the requirement to seek approval of a PESM?
6. Would an increased focus on the use of sectoral frameworks be of benefit, particularly if approvals were removed?
7. Do you have other suggestions to improve or simplify the application of the PE regime?
8. Do you have other suggestions on how the way in which HMRC interacts with partly exempt businesses could be improved?
9. What is your experience of carrying out the de minimis test?
10. What would the advantages and disadvantages of increasing the de minimis threshold be to business?
11. Are you aware of the existing simplification, and do you make use of it?
Removal of the de minimis limit
12. What would be the advantages and disadvantages of removing the de minimis test?
13. Do you have other suggestions to improve or simplify the application of the de minimis regime?
14. Do you have any suggestions on how to determine what can be considered as ‘insignificant’ that would be different to the current de minimis tests?
15. What is your experience of the CGS?
16. How much time and resource do you allocate to carrying out CGS calculations? Does this have an impact on your business?
17. To what extent does the CGS help to prevent cases of tax avoidance and unfair competition?
18. What would be the advantages and disadvantages of increasing the threshold for land and property businesses?
19. Would there be any other issues involved with increasing the land and property threshold?
20. If the threshold for land and property is increased, do you think we should consider having a different threshold for alterations, extensions, annexes and refurbishments, (i.e. retain the current threshold) or would it increase complexity?
21. Are there other ways in which the CGS can be improved?
22. Do you have experience of computers being included in the CGS?
23. Would removing computers from the CGS be a simplification for business?
24. What do you think of the current interval length?
25. Would a change in the number of intervals help businesses with their administration of VAT? Why?
26. Do you have other suggestions to improve and simplify the application of the PE and CGS regime?
27. Do you have any experience of the operation of PE and the CGS in other countries? How does the UK compare?
28. Do you have any other comments?
BUFDG will be submitting a response to the call for evidence which closes in September, and we would like to hear members' views in order to include these. If you have any comments on any of the questions listed above, please contact Amanda by 13 September.
