HMRC Update: Transitional guidance for VAT specified supplies

HMRC updated this guidance on 13 October 2026 by removing out of date guidance on VAT EU Exit Transitional Provisions from the ‘Overview’ section. The substantive guidance on the VAT treatment of specified supplies remains in place.

What the guidance covers The guidance concerns the Specified Supplies Order (SSO) 1999, which allows certain businesses to recover input VAT on costs connected with specified supplies of finance and insurance services. It is relevant to banks, investment managers, insurers and brokers making certain financial services or export-related services to EU customers.

Core VAT position Since 11pm on 31 December 2020, the SSO has extended input-tax recovery rights to specified supplies made to customers belonging in the EU, as well as those outside the EU. The changes are in regulations 91 and 92 of SI 2020/1545.

Supplies spanning Brexit Input tax incurred before 11pm on 31 December 2020 and used exclusively for an exempt EU financial supply made before that time remains non-recoverable.

HMRC also amended regulation 102(2A) so that existing approved Partial Exemption Special Methods are read in line with the revised SSO. Businesses therefore do not generally need to apply for a new PESM merely because of this change.

Practical takeaway The October 2026 update is an editorial clean-up rather than a change in policy. Businesses should still focus on the SSO rules for EU specified supplies, the 31 December 2020 cut-off, and the interaction with their partial-exemption method