In response to HMRC's consultation on simplifying the rules relating to land and property, the Institute of Chartered Accountants in England and Wales (ICAEW) has urged HMRC to abolish all VAT exemptions and remove all VAT options.
The ICAEW stated that the VAT rules regarding land and property are 'unnecessarily complex' and stand to benefit from 'significant simplification'. The Institute also highlighted the need for a more fundamental review of VAT exemptions.
In its response, the ICAEW also argued that abolishing exemptions would remove the difficulties for businesses posed by partial exemption. It suggested that all land and property transactions should be subject to VAT at the standard rate or reduced rate, other than those relating to domestic property, which should remain zero-rated. This would help to remove many of the complexities associated with the current rules, the ICAEW said.
In regard to the removal of all VAT options, the ICAEW commented: 'Any option, whether it be to tax or exempt a transaction, creates complexity and uncertainty, as there are then two possibilities for the VAT liability of what is essentially the same type of supply.'
For more information visit : ICAEW VAT representation
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