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HMRC internal manual

VAT Partial Exemption Guidance

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HM Revenue & Customs
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Consideration of Partial Exemption special methods: the declaration: preparing the declaration

A Declaration is needed each time a new method is approved or an existing method is amended (an amendment to a method in fact creates a new method). It relates to the whole method, covering the entire VAT registration, and cannot be restricted to parts of the method or to parts of the business. The business is responsible for ensuring that whoever signs the Declaration does so with sufficient authority, knowledge and understanding of its actual and planned use of costs.

The Declaration will normally be attached to the proposed method for which HMRC approval is requested. In some cases HMRC will invite an updated Declaration because the proposed method has changed from the one put forward, which may happen as a result of enquiries and discussion. Businesses may also choose to discuss with HMRC how general partial exemption principles apply to their business before they propose a method.

The business decides who should make its Declaration having regard to its size, structure, complexity and how it manages its tax affairs. A large business might authorise the VAT or Tax Manager to make the Declaration, whereas in a smaller business a director or partner might do this. In deciding who this might be, it is important to be aware that in applying its test of reasonableness HMRC will compare the actions of the signatory to the actions of a reasonable person. Whilst a business may choose to delegate the making of its Declaration to a third party, it still remains responsible for it being correct.

The Declaration can be made using the template at PE44000 - Annex A. It should clearly identify the business, the method to which it relates and the signatory.