 |
|||||||||||||||||
 |
|||||||||||||||||
|
Monthly Newsletter - December 2007
HMRC view of the construction of houses or flats in the grounds of existing care homes, nursing homes or similar buildings With the growth of assisted living accommodation within the grounds of an existing care home or nursing home, HMRC have set out their policy on the VAT treatment of the construction and the first major interest grant of these properties. In some cases HMRC believe that these units did not have planning permission that allowed them to be used or disposed of separately from the care home. In these circumstances they consider the construction is ineligible for the zero rate, as is the first grant of a major interest in these units. The reference is Business Brief 66/07.
HMRC have produced a glossary of terms and the VAT position of customer discounts, reference HMRC Business Brief 67/07. Assets used partly for non-business purposes When an asset is purchased and used partly for non-business purposes, a new system of VAT recovery referred to as the “Lennartz Accounting” Regulations came into force on 1st November 2007. HMRC have produced an Information Sheet detailing how the regulations work but they can only be applied to the purchase of goods or the purchase of services that create a new asset such as the construction of a new building or civil engineering works. The system can be applied by a business that acquires goods that are used for its taxable supplies but also for non-business supplies. It allows recovery of the VAT but with a payback over a 20 year period for buildings and 5 years for other goods, and VAT repayment is calculated on the full cost to a business in supplying those goods for non-business use. The reference is HMRC Business Brief 68/07 and Information Sheet 14/07.
Insurance Internet Services Following a decision in the VAT Tribunal in InsuranceWide.com Services Limited, HMRC have issued a Business Brief relating to the VAT treatment of on-line comparison website services that effectively put customers in touch with insurers via click-through websites. InsuranceWide received commission from the insurers based upon a number of contracts that resulted from introductions. The Tribunal found that none of the services provided fell within the VAT exemption because they were not an insurance agent. Indeed InsuranceWide specifically disclaimed from being an agent on its website and was found to be playing no part in the negotiation of the contract. The reference is HMRC Business Brief 69/07.
Intervention Letters Intervention letters were headline news last summer following a pilot study but the issue has reappeared. New intervention letters are targeting road hauliers highlighting three areas that HMRC consider risks. These are incorrect VAT treatment of purchases and disposals of vehicles, recovery of VAT on fuel purchase in the EC and other trade activities such as hire of trains, etc. For assistance please contact us.
Revised Notice "Should I be registered for VAT" HMRC have issued a new Notice giving guidance on registering for VAT which replaces all previous Notices from November 2007. On this subject, HMRC have advised that the current on-line system cannot accept VAT applications for voluntary registration where the date requested is after 31st December 2007 between now and January 2008. If registration is required after 31st December 2007, a paper VAT registration form VAT 1 must be completed. The reference is VAT Notice 700/1 “Should I be registered for VAT” VAT Treatment of the supply of parts and equipment in the course of construction of qualifying ships and aircraft HMRC have issued an Information Sheet concerning the supplies of parts to ships and aircraft that are under construction and will become a qualifying ship or aircraft after construction. The reference is Information Sheet 15/07. A Polish(ed) VAT Scheme? In an ECJ case the Advocate General has issued an opinion relating to Netto Supermarkets in Germany and the production by Polish shoppers in Germany of discarded till rolls that they had collected from the car parks, shopping trolleys and waste bins. The shoppers then submitted them for a refund accompanied by forged forms and forged Customs’ stamps. Between 1992 and 1998 Netto refunded considerable sums of VAT on the basis of the documentation provided. However they later discovered the fraudulent conduct and reported the fact to the local Inspector who, after investigation, demanded payment of the refunded VAT. The Advocate General considered the question of whether Netto had acted with due commercial care and in good faith before discovering the fraud. He concluded that the refund of VAT by Member States cannot be precluded on the grounds of fairness if conditions are not satisfied but the taxable person was unable, even by exercising due commercial care, to recognise that these conditions were not met. This case follows on from the other cases being put before the Court relating to knowledge and the exercising of due diligence checks for supplies of goods that have been exported, in which case the exporter must be in a position to be aware that the end user and the delivery address are not fraudulent.
DIY Builder In a recent case involving a DIY Builder the Tribunal decided they were entitled to reclaim the VAT on new plastering services following the defective work by the original plasterer even though the certificate of completion had been issued. Case Reference: Mr and Mrs James VTD 20426
Late Admission to the Flat Rate Scheme The tax payer applied for admission to the Flat Rate Scheme to be back-dated for nearly four years and this was refused as VAT Returns had already been made. The Tribunal, however, identified five characteristics that HMRC had not taken into account and allowed the appeal and remitted the case back to HMRC to reconsider. Case Reference: C J Anderson - LON/06/826.
And finally..... Santa's Hamper For Christmas the Ontario Canada State Government have abolished the retailers’ sales tax on all bicycles purchased between 1st December 2007 and 31st November 2008 as an incentive for Ontarians to go out and get fit via cycling. Indeed cycle helmets, lights and bells will also be exempt from the sales tax but bikes over 1000 Canadian Dollars will still carry VAT.
|
|
|||||||||||||||
|
|||||||||||||||||
Home | Services | Specialist Services | About Us | Our Clients | News | Links | Careers | Contact Us | Privacy | |
|||||||||||||||||
