Value Added Tax Act 1994 Schedule 11A paragraph 2

Obtaining a tax advantage

Schedule 11A paragraph 2 defines what it means for both taxable and non-taxable persons to obtain a tax advantage for the purposes of VAT avoidance disclosure.

• A taxable person obtains a tax advantage where the net VAT payable in any VAT period is reduced below what it would otherwise be, or where non-deductible tax is reduced
• A tax advantage also arises where a VAT credit is obtained that would not otherwise exist, or is larger or earlier than it should be
• A timing advantage counts as a tax advantage — where input tax is recovered before the supplier accounts for the corresponding output tax, and that gap is artificially extended
• A non-taxable person obtains a tax advantage if the VAT they bear (and cannot reclaim) is less than it would otherwise be