The British government has finally taken into consideration that VAT exemption for business research supplied between the so-called “eligible bodies” does not comply with the rules and guidances of the EU. HM Revenue&Custom consulted on December the 20th on a plan to withdraw the exemption, set out in Group 6 of VATA 1994 Sch 9, with effect from 1 August 2013.
HMRC seems to understand that most of the research performed in the UK is funded by grantsand outside the scope of VAT.
‘Most of the remainder is taxable business research and so the amount of exempt research is understood to be very small. If this is right, the loss of this exemption should not have a significant impact on UK research but we hope responses to this consultation will clarify this one way or another.’