Anti-avoidance legislation1 was introduced to prevent forestalling in connection with the increase in the standard rate of VAT to 20% from 4 January 2011. The legislation provides that a supplementary VAT charge of 2.5% will apply where the customer cannot recover all the VAT on the supply and certain other conditions are met.
This provision has effect from 27 July 2010 but applies, for the most part, on a retrospective basis from 22 June 20102.
The legislative provisions relating to the supplementary charge are contained in F(No 2)A 2010, s 3, Sch 2 and are described below.
Conditions for charge
The supplementary charge applies to supplies made (subject to certain exclusions) on or after 22 June 2010. It only applies where the conditions set out below are met.
Conditions applicable to supplies other than
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