vatconsultancy

Monthly Newsletter from The VAT Consultancy

Tue, 11 Jan 2011 09:58:09 -0500

Home | Services | Specialist Services | Contact Us January 2011 Happy New Year ! First of all we would like to wish all our clients a Happy New Year and a prosperous 2011, and trust that you find the newsletter to be useful and informative. Before Christmas we asked people to complete a client survey form and the results have been extremely positive but if you've not already done so it's still is not too late to let us know what you think. To take part, click here, and for every completed survey we receive we'll donate £1 to Save the Children. The results of our survey will help us 'fine tune' to develop and improve the services you need during 2011. We very much appreciate your time. Under the Spotlight How the VAT rise is a blessing in disguise if you operate the Flat-Rate Scheme The recent rise in VAT has highlighted the benefits of the flat-rate scheme for self-employed workers and SME's. This month we take a look at the scheme and show how those businesses who operate it could actually save money. Read our blog This month on the VAT Blog With the latest rise in VAT we're urging businesses to think positively. Whilst the 2.5% hike can make for a difficult start to the New Year, if businesses assess the impact and act accordingly it will be possible to manage the rise as effectively as possible and minimise the risk of errors arising. Read the blog to find out more or follow us on twitter @vatconsultancy for daily tips! VAT rates are going up all over the place! The UK isn't the only country to be increasing it's rates of VAT: - The Irish government will raise its standard VAT rate from 21% to 22% in 2013, and then from 22% to 23% in 2014. - Latvia will change the standard VAT rate from 21% to 22% but the reduced rate will remain at 5%. -Poland. On 1 January 2011 it will increase the standard VAT rate from 22% to 23%. The reduced VAT rate will rise to 8%, compared to the current 7%. This rise is planned for a three year period as part of the deficit cutting plan. - Portugal, Azores and Madeira. The VAT standard rates were increased from 21% (applicable in Portugal Mainland) and 15% (applicable to transactions taking place in Azores and Madeira) to 23% and 16%, respectively, as from 1 January 2011. - The Slovakian government recently decided to increase the standard VAT rate from currently 19% to 20% with effect from 1 January 2011. - The Swiss VAT rate will be 8% from 1 January 2011. The reduced VAT rate will be 3.8% and 2.5% in 2011. Deadline reminder! Don't forget the deadline for recovery of EU VAT incurred in 2009 under the EU 8th Directive is 31st March 2011. All we need from you is: Invoices Letter of Authroity (which we will arrange for you in local language) Basic UK VAT registration information Our simple VAT recovery service will take away the headache of getting your businesses VAT refunded. For further information contact Peter Bradshaw, Head of International recovery. Changes to the VAT recovery rules of land, property, boats and aircraft From 1 January 2011, taxpayers buying land, property, ships, boats, other vessels or aircraft will be permitted to claim VAT only to the extent the asset is used for business purposes, subject to any partial exemption restriction. However, to help ensure a fair recovery of VAT if use changes, ships, boats and other vessels and aircraft costing £50,000 or more will now be included in the Capital Goods Scheme. Please contact us if you have clients who may be affected. A reminder on VAT on postal services Following the ECJ ruling regarding the VAT exemption of postal services, as from 31 January 2011 VAT will be applied to a range of postal services at the new standard rate of 20%, including: bespoke messenger services, early morning delivery services, Airsure, KeepSafe, Special Delivery by 9am, Door2Door, and a number of Parcelforce services. For further details do get in touch. From the VAT Tribunals The Athenaeum Club (TC00833) This was an appeal against a penalty imposed under Schedule 24 of the Finance Act 2007 for an error found in the appellant's VAT return which HMRC classed as careless. The Club appealed against a penalty of over £4,000 imposed as a result of an inaccuracy in the VAT return discovered by HMRC. The issue revolved around a bill from a supplier but it was only a statement and not a VAT invoice. HMRC issued the penalty once the return had been adjusted for this error. Despite taking advice from the previous Inspector, the appellant believed they had acted in good faith and submitted the appeal. The Tribunal found the tax payer to be truthful and sincere and had carried out sufficient checks that did not constitute careless action. The appeal was therefore allowed and the penalty cancelled. The moral of the story is that HMRC do have the powers to impose penalties for what they classify as careless errors but these are an appealable matter and we will be happy to advise clients or businesses that have received similar penalties. Michael Cohen (TC00870) This case involved the entitlement to zero rate goods as exports where the tax payer holds sufficient evidence of export to support the supply of goods and the invoice to the customer. The appellant is a manufacturing jeweller and the assessment was raised to charge output VAT on ten transactions which were supplies of goods to places outside the Member States. The issue was whether there was sufficient supplementary documentation to demonstrate that the goods were shipped to the customer outside the EU. The appeal was whether HMRC were reasonable in refusing to accept the documentation produced by the appellant was satisfactory evidence of export of the goods. In the circumstances the Tribunal found that in two instances there was satisfactory evidence but in eight others there was insufficient evidence. Exporters should be made aware that it is critical that the right evidence is obtained and retained within the three month period following the date of the supply to avoid assessments and interest. Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

Help us Save the Children

Tue, 21 Dec 2010 06:13:07 -0500

Home | Services | Specialist Services | Contact Us 21st December 2010 Dear , Season Greetings, In our efforts to improve the services we offer our clients, I would be very grateful if you could take a couple of minutes to complete our client survey. For every completed survey we receive we will donate £1 to the Save the Children charity. The results of our survey will help us 'fine tune' and develop the services you are most likely to need during 2011. We very much appreciate your time. Please click here to go to our survey. I would like to take this opportunity to wish you happy and safe Christmas and a prosperous New Year. John Crawford Managing Director Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

Monthly Newsletter from The VAT Consultancy

Thu, 16 Dec 2010 11:11:13 -0500

Home | Services | Specialist Services | Contact Us December 2010 Under the Spotlight In our twentieth year, 2011, looks to be very busy for the team here at The VAT Consultancy - and that's not just due to the VAT rise on 4th Jan. The arrival of VAT and customs duty Director, Julie Park, will allow us to strengthen and expand our corporate client offering. Julie has advised clients across a range of industry sectors on a broad range of issues including international supply chain issues such as VAT efficient VAT and customs duties structuring and VAT in the travel sector. Read more about Julie's work This month on the VAT Blog We've been busy getting ready for the New Year VAT rate rise with our 12 VAT rules of Christmas, advice for businesses, charities and consumers on everything from minimising the impact of the rise on your business and your clients through to being savvy with the choices you make on the high street. Read the blog to find out more or follow us on twitter @vatconsultancy for daily tips! The office christmas party VAT rules! Many businesses don't realise that they can claim the VAT back for staff on their office Christmas party. Read our blog to find out just what the do's and don'ts are. Double hit in New Year for businesses purchasing or leasing corporate jets Businesses purchasing or leasing corporate jets from January 2011 will face a double whammy as the VAT rate on such transactions will increase from the current 0% to 20%. Given the cost of purchasing such jets typically runs at £25m plus, even where a business can fully recover the VAT incurred, there will be a cash flow disadvantage until the VAT is refunded by HMRC. It is also commonplace for senior executives to use the aircraft for non business purposes so the VAT incurred will not always be recoverable, adding to the bottom line cost. The increase comes as a result of the increased UK standard rate of VAT and also a change in the type of aircraft qualifying for zero rating. Historically zero rating applied simply if the aircraft weighed more than 8,000 kgs and was not designed or adapted for recreation or pleasure. From 1 January 2011 an additional test applies - the aircraft must be used by an airline flying on international routes. This excludes corporate jets as the business owning or leasing them is typically not an airline. Many businesses have sought to bring forward purchases of such aircraft or import the aircraft prior to 1 Jan 2011 and return it overseas for fitting out after 1 Jan where appropriate so as to reduce the increased VAT cost. This is achieved with the use of Outward Processing Relief (OPR). For more detail on this contact Julie Park HMRC News Round-up Intrastat Thresholds Intrastat thresholds increase from 1st January 2011 and will affect businesses trading with other EU Member States. The exemption threshold for Despatches remains at £250,000 while the exemption threshold for Arrivals remains at £600,000 per annum and Delivery term threshold remains at £16 million. Notice of requirement to give security to Customs and Excise HMRC have revised Notice 700/52 which sets out the background to the Notice of Requirement to give security to Customs and Excise which may occur if a business makes a large or unusual VAT claim or claims that HMRC need to verify. If you have in your previous or current business failed to comply with VAT obligations, this may also trigger a requirement to provide security. We would remind tax payers that if security is not agreed with HMRC, then they can be prosecuted both individually and as well a company if they continue to trade without providing the security being asked for. There is an appeals procedure and we will be happy to discuss the specific cases as they arise. Interest on monies due to HMRC You may be aware that H.M. Revenue and Customs charge interest on monies due to them as a result of an error or omission on a VAT Return and this interest was normally notified on the same document as the assessed VAT. We understand that the interest is now notified on a separate document to the assessed VAT and is generally received a few weeks after the VAT assessment. Be aware therefore when trying to arrange financial arrangements to meet additional liabilities that the interest charge will arrive at a later date. All assessments and charges to interest should of course be critically reviewed to ensure that the tax and the interest has been correctly computed and we will be happy to advise clients where they feel the tax is not correct. News from the Tribunals OM Properties Investment Co. Ltd (TC 00752) In the above Tribunal case the issue was the insurance charges to tenants of commercial properties which have been opted to tax. The landlord insured the properties under a block policy and extension to the insurance BUT the charge for insurance should have followed the VAT liability of the rent being charged which is standard rated. Landlords should be aware of the above ruling. Airtours HolidayTransport Ltd The Upper Tribunal has allowed an appeal by HMRC against the decision of the First-Tier Tribunal that VAT charged to the tax payer by Accountants in respect of fees relating to a tripartite agreement was deductible as input tax by the tax payer. The Upper Tribunal agreed with HMRC that the input tax charged by the Accountants was not input tax to Airtours but was in fact input tax to the Banks and other institutions who had instructed the Accountants to provide their services. The morale of the story is that while you may pay for a service, you may not necessarily be entitled to the input tax, particularly where there are tripartite agreements in place. Seasons Greetings We would like to send best wishes for Christmas and the New Year to all our clients and readers from the team at The VAT Consultancy. As is our custom, we will be making donations to charities in lieu of sending individual cards. The offices will close on Thursday 23rd December and will reopen as follows: 29th, 30th, 31st December 4th January 2011 - normal office hours resume. Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

Top Level Move Strengthens Team

Fri, 10 Dec 2010 03:46:03 -0500

Home | Services | Specialist Services | Contact Us 10th December 2010 Britain's leading independent VAT practice is strengthening its team with a director joining from the worldwide corporate advisory group Deloitte. The VAT Consultancy has appointed Julie Park as VAT Director to help steer its expanding business of indirect tax services and advice for company clients. Julie has 15 years' experience at Deloitte and Touche LLP as a VAT auditor and most recently as a director in its global trade and customs team. She has advised clients across a range of industry sectors on international supply chain issues such as VAT efficient structuring, customs duties and transfer pricing. John Crawford, Managing Director of The VAT Consultancy, said: Julie's appointment is a significant move for us as we continue to strengthen our corporate client offering. Her depth of knowledge and experience at director level will be a great asset. Among the recent projects that Julie has worked on at Deloitte are the management of indirect tax risk, retrospective IPR (Inward Processing Relief) and PCC (Penalty Computation Code). Julie said: The VAT Consultancy has a growing reputation for providing national and international corporate clients with peace of mind on VAT issues. I am delighted to join such a dynamic, independent company and I look forward to helping the team develop for future success. Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

Monthly Newsletter from The VAT Consultancy

Thu, 11 Nov 2010 00:35:26 -0500

Home | Services | Specialist Services | Contact Us November 2010 Under the Spotlight VAT is not the only tax to be going up in the New Year- find out which other tax is set set to go up in 2011 which no-one has mentioned yet. Read the Blog This month on The VAT Blog Our new VAT Blog is proving to be very popular, here's a quick round-up of the issues we've discussed in the last month, just in case you missed any: - Been challenged by HMRC? Always getting it in writing... read more - The Tax Man's on your case... read more - All change for Local Authorities ....read more - Private Sector must now work hard to create jobs....read more - VAT on business entertainment of overseas customers ...read more - Building a new home? If you are planning on doing it DIY style...read more HMRC News Round-up Time to Pay Arrangements There is increasing press coverage of HMRC's tightening stance with regard to time to pay arrangements and we would therefore emphasize in the current climate the need to approach HMRC at the earliest opportunity to discuss how they can discharge all their liabilities, be they VAT, PAYE or NIC. HMRC's Website HMRC have rolled out more toolkits to help advisers avoid errors when filing client returns and of course these are available to the tax payer as well. One of the toolkits covers VAT Input Tax, which we have looked at and find that it is a useful guide, but if you still need help on a specific issue then do contact us If in doubt...appeal A recent win of £16,315 for a TVC client just goes to show how fighting hard against HMRC can still have a positive outcome without having to attend Tribunal. The case was specific in its facts but revolved around whether a property fitted the definition of a 'dwelling' on the basis of it being 'designed or adapted as one' despite it never having undergone planning to convert it from commercial premises. Despite an initial policy unit response which disagreed with our contention that the property was commercial for VAT purposes, HMRC subsequently altered its view before the Tribunal date was set and therefore withdrew the assessment. Highly unusual, but worth considering whether the fact that a Tribunal appeal was lodged was a factor in them changing their mind..... News from the Tribunals TGS Construction Services This case involved the appealing of a Default Surcharge when the excuse was the insufficiency of funds. In this case the failure of a main customer to pay gave rise to a reasonable excuse and on this basis the VAT and Duties Tribunal allowed the appeal, so a surcharge of 15% of the VAT paid late was cancelled. Gilders Transport Limited Here a further five Default Surcharges were challenged because of the insufficiency of funds following the Foot and Mouth outbreak. Delayed payments by DEFRA created a severe strain on the tax payer's cashflow and it was unable to meet its VAT repayments. The insufficiency of funds was a reasonable excuse. Express Food Supplies This was an appeal against a penalty that was imposed by HMRC in respect of an inaccurate VAT Return, the mistake being made by the tax payer's temporary bookkeeper, HMRC deemed the error to be careless. The prompt disclosure however did not affect the decision and the Tribunal upheld the penalty assessed at 15% of the potential lost revenue. This is the first case we have seen of a careless error attracting a penalty. Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

Monthly Newsletter from The VAT Consultancy

Thu, 21 Oct 2010 10:50:31 -0400

Home | Services | Specialist Services | Contact Us October 2010 Under the Spotlight Countdown to the VAT rate rise With the forthcoming change to the increase in VAT on 4th January 2011, businesses should now be looking at their business strategy with the run up to the VAT rate change and retailers in particular should decide on their pricing structure for Christmas bearing in mind the anti-forestalling legislation. This prompted an enquiry recently on our Got A Question feature on our website about the order for a new motorhome due for delivery in April. Read our Blog to find out more.... Case Study Been Challenged by HMRC? Always get it in writing! We have recently been involved with a successful complaint to the Revenue Adjudicator on behalf of a client. Read more here Error Correction It is now more important than ever to make sure that errors in VAT accounting are appropriately corrected. Errors under £10,000 (or up to £50,000, but not more than 1% of the Box 6 figure), which are considered 'careless' may be adjusted on the next VAT return. All other errors, including those considered to have been 'deliberate' are to be disclosed directly to HMRC. If a business wants to have the opportunity to mitigate the impact of any penalty that may be applied, errors adjusted on a VAT return must also be notified to HMRC. Interest may also be applied! Of potential greater concern is that penalties may be applied where an incorrect or unnecessary error correction is made. If the unnecessary correction is considered careless, any subsequent corrective action may also be considered careless, with the potential for a further penalty! The combination of the error correction process along with the penalty regime makes for a complex mix of considerations. If you are concerned about how to deal with error correction or adjustments to VAT accounting contact us at The VAT Consultancy. Not-For-Profit - New Construction - Application of the 95% rule for Zero Rating There has been much media coverage within the VAT world concerning the withdrawal of the previous non-business use concession for charities constructing new buildings. In summary, it used to be possible to zero rate the construction of a new relevant charitable purpose property, if it's use was 90% or greater for non-business purposes. This concession has been removed. The not-for-profit sector may now only receive zero rated construction service where the resulting property is to be used at least 95% for non-business purposes. We have recently advised on the construction of a relevant charitable purpose structure which achieves the zero rate in respect of over 75% of the construction costs - resulting in a significant saving for the charitable body. For more information on how we can work with you to achieve similar VAT savings, contact us. HMRC NEWS ROUND UP Supplies of Nursing Auxiliaries and Care Assistants by State Regulated Agencies With effect from 1st October 2010 the legal requirement for nursing agencies to be registered under the Care Quality Commission will cease and responsibility for quality standards will pass to those organisations that provide the regulated activity. By concession HMRC now accept that where employment businesses are registered the supply of nursing auxiliaries can be exempt for VAT. Again we will be happy to provide specific advice to individual businesses who may be affected by these changes. Revenue Customs Brief 37/10 VAT on Leisure Trusts providing all inclusive membership schemes You will recall that with effect from 1st April 2009, HMRC amended its interpretation of the law and therefore its guidance on the VAT treatment of membership schemes allowing unlimited access to leisure facilities in a leisure centre. H.M. Revenue and Customs Brief 37/10 supersedes previous Briefs on the subject and sets out in further detail the effects of the changes and the impact for such issues as Partial Exemption and the Capital Goods Scheme. Steve McIntyre will be happy to provide further advice if you see these changes affecting your business. NEWS FROM THE TRIBUNALS VAT and Taxis Albion Taxis Limited (TC00671) This is a typical case involving whether the company acted as principal or agent for cash customers and account customers. This is a well trodden path and illustrates the need to have supporting documentation if the Taxi business is seen to be acting as principal for account customers or agent for cash customers. VAT windfall for EMI The ECJ has ruled this week that the long running case brought by EMI against H.M. Revenue and Customs in respect of the VAT treatment of CD promos and other business samples was incorrect. The effect for EMI is that they no longer need to account for VAT on promotional material and therefore a claim for overpaid VAT will be due. If you have clients who provide promotional material in whatever trade sector, then following the EMI case they will be entitled to a refund of VAT. We will be happy to provide specific advice. Introducing The VAT Blog As part of our commitment to provide you and your clients with the best advice possible, we'd like to introduce you to The VAT Blog. Not only will you be able to read topical articles and get best practice advice but it is also your opportunity for discussion and to get an objective sounding board on any VAT matter. Feel free to introduce it to your colleagues and clients - we would love to hear from them! Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

A small correction...

Thu, 16 Sep 2010 09:37:51 -0400

Home | Services | Specialist Services | Contact Us 16 September 2010 A small correction.... We would just like to point out a small correction in relation to the last item in the September newsletter regarding the case of Crazy Farm Golf Course Ltd. Reg.111 has always allowed for pre-registration input VAT to be reclaimed for goods held on hand at the date of registration, where the input VAT had been incurred in the preceding 3 years. The newsletter did omit to clarify, but for those with a registration date (or required registration date of) on or after 1 April 2010, the time limit will now be 4 years. Those with a registration date on or before 31 March 2010 will be subject to transitional arrangements. Please contact us if further detailed information is required. Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

The VAT News September 2010

Thu, 16 Sep 2010 05:37:35 -0400

Home | Services | Specialist Services | Contact Us September 2010 Under the Spotlight A supply made after the 4 January 2011 will carry VAT at 20%. Or will it? A reminder for businesses, and consumers, that it will still be possible to secure the 17.5% rate of VAT for supplies made on or after 4 January 2011, as long as the provisions of the anti-forestalling legislation are not breached. Find out more HMRC News Round-up Good News for Business Travel Agents We have recently received agreement from HMRC, that Revenue and Customs Brief 21/10 on bill-back arrangements, works for overseas clients. Find out more Confusing Guidance from HMRC? We are concerned that recently published guidance from HM Revenue and Customs (HMRC) and the Association of British Insurers (ABI) about when financial advisers should charge clients the tax will add further confusion to an area where people already get caught out . The guidance makes it clear that the important issue for advisers to consider is not whether they are receiving fees rather than commission, as it has been commonly thought, but the nature of the work they are doing for the client. If you need further advice on this complex area contact us. No excuse for missing your VAT return deadline! When enrolling for a VAT on-line service, don't forget that you can opt to receive free email reminders and alerts which will tell you when your VAT return is due and alert you to changes to the VAT rules. Crackdown on Carbon Credit Fraud HMRC have announced that from November a zero VAT rate will be put in place to combat the fraudulent activity in trading in carbon credits. The new system ensures that the customer rather than supplier has to account for VAT to H.M. Revenue and Customs. HMRC Business Brief 35/10 has full details of the proposed reverse charge accounting for businesses trading in emissions allowances including completion of the VAT Returns and the invoicing requirements. Please call your usual consultant if you require any further information. H.M. Revenue and Customs - Revised Notice 700/45 HMRC have revised the above Notice which provides guidance on how to amend VAT records if they contain errors; how to correct errors that are discovered on VAT Returns already sent to HMRC and to claim refunds. The voluntary disclosure rules are explained in further detail and we will be happy to advise on any specific issues. Revenue and Customs Brief 31/10 This Brief explains H.M. Revenue and Customs' position following the Court of Appeal judgment in Insurancewide.com Services Ltd and Trader Media Group Ltd. The case concerns the VAT liability of certain supplies of insurance introductory services provided via the internet and HMRC now consider them to be exempt from VAT. HMRC are not appealing the decision further so in certain circumstances it is possible to obtain refunds for overpaid tax charged on insurance introductory services that fall within the findings of the Court of Appeal. To qualify for the exemption there are at least four conditions that have to be met and we would be happy to advise on any specific case. News from the Tribunals Aleris Recycling (Swansea) Limited This was an assessment issued by HMRC as the tax payer could not provide valid commercial evidence for exports within the specified three month period. Once the documentation was produced the assessment was withdrawn but the question was whether HMRC were entitled to charge interest on the amounts assessed? The Tribunal ruled that HMRC were entitled to charge interest (over £100,000) in these circumstances. The moral of the story is businesses must ensure that there is valid commercial evidence to support the exportation and removal of goods within the three month period to avoid interest and/or penalties. Thimbleby Farms Limited This was a case involving the value of the supply of game shoots to a director of the farm. The Tribunal ruled that the value of the supply to the director was at cost rather than the open market value but the case specifically highlights a principle that will apply to many businesses which supply services to its employees. Such supplies could trigger a VAT liability which will be a cost to the business. Contrast Graphic Supplies Limited This was another case on the input tax on EU goods purchased under the Flat Rate Scheme. There is no entitlement to input tax in respect of the purchases of goods from the EU when the purchaser is using the Flat Rate Scheme so anybody using the scheme should bear this in mind. Crazy Farm Golf Course Limited This is a case involving a request to back-date registration in order to obtain recovery of VAT on supplies made before the date of registration. When registering for the first time it is possible to obtain input tax credit on services going back six months and, for goods on hand, the time limit is three years. It is important when applying to register for VAT to establish the correct date of registration as once this has been put in place, HMRC's refusal to back-date it further is seen to be reasonable. You only have one go! Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

The VAT News August 2010

Tue, 10 Aug 2010 05:07:43 -0400

Home | Services | Specialist Services | Contact Us August 2010 Under the Spotlight Time To Pay Agreements There has been considerable concern expressed in the Press recently of HMRC's stance with regard to time to pay arrangements and that their original policy of granting time to pay requests has tightened up considerably. It is important that businesses approach HMRC at the earliest opportunity to discuss how they can discharge their liabilities, not only to avoid potential closure at a later stage but penalties and surcharges. We would again remind you that unexpected cashflow shortage caused by a bad debt could be seen as a reasonable excuse for the avoidance of any penalties or surcharges. Read the blog HMRC News Round-up Compound interest is alive and kicking! The Court of Appeal has indicated, in the Compound Interest Project, that the time limits previously preventing payment of Compound Interest, are not applicable. This re-ignites interest in the Compound Interest arena and means that businesses having made a claim for overpaid or underclaimed VAT may be able to pursue a claim for Compound Interest. This is not going to be resolved overnight and taxpayers should be prepared to be patient - the legal process will take its due course. Demonstrator cars - capital items? There has been a twist in the debate over whether demonstrator cars operated by motor dealers are capital items or not. Since 2002 the UK has relied on the results of a case which determined that demonstrators were capital items. This has meant that the sale of such vehicles can be excluded from any partial exemption calculations, thus enhancing recovery of VAT on costs. However, a case before the European Court of Justice has determined that demonstrators are not capital items as they are an integral part of the businesses activity. As many demonstrator cars often incur an element of private mileage, the dealer is unable to recover any VAT on the purchase of the demonstrators and the subsequent sale will be exempt from VAT. If the ECJ decision is to be followed in the UK, it could mean that motor dealers will be required to apply partial exemption calculations, which could result in a restriction on the amount of VAT that can be recovered on the costs of the business. VAT Treatment of Sports Related Services (H.M. Revenue and Customs Brief 15/10) We would remind clients that changes to the VAT exemption for sports related services is being introduced from 1st September 2010 that will primarily affect affiliation fees to be charged by sports governing bodies to member clubs, but in turn member clubs need to look at their own VAT treatment of other sports related services. We would be happy to carry out a review of activities and for further details please contact Malcolm Nichols. ECJ Ruling on VAT Voucher Case The ECJ has ruled the provision of shopping vouchers to staff in salary sacrifice schemes is subject to output VAT following the decision in the AstraZeneca case. This will impact upon employment contracts as well as tax liabilities and all businesses supplying shopping vouchers to staff by the salary sacrifice scheme. News from the Tribunals VAT and Security In a case involving Sanleo Limited and Zonin Restaurants Limited HMRC imposed a security charge because a failed group of companies was replaced by the two new businesses. However the appeal was allowed because the reviewing officer did not take into consideration all the evidence at the time. HMRC are obliged to look at all the evidence at the time of the decision in order to decide whether the decision to impose security in these circumstances is reasonable or not. We would be pleased to advise any clients who are facing similar circumstances in these tough economic times. VAT Sale of Registration Marks In the Tribunal case of Mr T Hovan, the case concerned was whether the supply of registration marks (personal number plates) constituted a standard rated supply for VAT purposes where the supply is made in the UK or by a UK based supplier. The conclusion was that if the supply is based in the United Kingdom, the supply of the registration mark is standard rated. There was considerable confusion in this particular case concerning the advice given by HMRC and the appellant asked the Tribunal to decide on this, however a Tribunal cannot look at cases involving potential misdirection. The morale of the story is that if you are unclear about the advice given by HMRC, then contact us and we will be happy to provide correct advice. Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //

Are you confused.com?

Thu, 05 Aug 2010 05:59:55 -0400

Home | Services | Specialist Services | Contact Us 5 August 2010 Are you Confused.com? HMRC have issued Business Brief 31/10 which revises their policy on click throughs for buying insurance on the internet. This confirms that HMRC will not be appealing the Court of Appeal decision, and insurance click through services are exempt from VAT. The internet click-through service needs to be providing more than a mere conduit service in which a customer is passed to or otherwise introduced to the insurance company, which means that the click through service will be expected to provide additional services such as endorsement or selection processes. Businesses which have previously accounted for VAT on such supplies can now claim refunds of VAT. To find out more about making a claim contact us today! Applying the Zero Rate to New Charitable Purpose Buildings There has much debate surrounding the withdrawal of HMRC's previous concession allowing the zero rate to be applied to the construction of new buildings which were to be used at least 90% for non-business purposes. This concession has now been withdrawn and non-business use must now be at least 95%. There are, however, several methods that can be used to measure the 95%, and it may also be possible to apply the zero rate to defined parts of the building only. On a cautionary note, where the zero rate has been applied there may be a 'claw-back' if the non-business use is not sustained. For more information contact The VAT Consultancy. Potential Cost Sharing Benefits for Charities EU law provides an exemption from VAT for shared services supplied by an association created under a cost-sharing agreement.This has not previously been enacted in UK law. However, HMRC has now agreed to launch a consultation exercise this autumn, which may indicate that such an exemption will appear in UK VAT law in the future. Whilst such provisions will not permit arrangements which distort competition, they may provide cost saving benefits to charities and the broader not-for-profit sector. Keep an eye on further updates from The VAT Consultancy. Need some VAT help? Contact us on 01962 735350 var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); try { var pageTracker = _gat._getTracker("UA-1379645-1"); pageTracker._trackPageview(); } catch(err) {} //