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Monthly Newsletter - February 2007
In this issue:
VAT Changes to the exemption for medical services Further to a 3 month long consultation, HMRC have now released details of the new ‘purpose test’ in respect of medical services. The new purpose test will therefore limit the exemption from VAT for health services to those services which constitute the provision of ‘medical care’. A more detailed list of those services affected may be found in Public Notice 701/57 which has been updated in light of these announcements. The changes will take place from 1 May 2007 (subject to House of Commons approval) and anybody who supplies affected services should monitor the level of their supplies to ensure VAT Registration is sought on time.
Our colleagues at Adtax specialise in PAYE, NIC & CIS and have provided details of the new CIS scheme. In 2003 the Chancellor announced a new scheme to run from April 2005, which soon became 2006, and then April 2007. The new scheme had three main aims; to reduce regulatory burdens, improve compliance and to highlight employment status issues. With just over two months until the new CIS goes live, both mainstream and deemed contractors are being urged to review their current systems and procedures to ensure compatibility with the new Scheme. All contractors who operate the CIS should now have received either a letter (for those with up to 125 contractors) or a CD-ROM (for those with over 125 contractors) listing all the sub-contractors they have used since April and, most importantly, the sub-contractors verification status under the new CIS.
The High Court has overturned the Tribunal decision on whether the charge made for membership to Tumble Tots was a multiple supply (to include a t-shirt, magazine and insurance etc) or as the taxpayer contended mixed supplies of a zero-rated t-shirt, standard rated benefits and VAT exempt insurance. The court ruled it was a single standard rated supply and provided useful arguments on the vexed question of single or multiple supplies.
Cash Bingo - participation and session fees HMRC have released confirmation of the treatment of both stake and session fees where these are received as part of one single payment. They have also confirmed that payments for a session are normally for a certain amount of games, once these games have ended, further payments by the player should be dealt with on a game-by-game basis. The participation fees remain Standard Rated whilst the stake fee is outside the scope.
Place if supply of Acting Where an acting contract is signed and performed outside of the UK then there is an argument to either treat the supply as Sch 5 (therefore treat as outside the scope) or, as HMRC have recently argued, as treating the supply as a provision of ‘acting’ skills which falls under the basic supply rules (and thus subject to UK VAT). We are aware of HMRC issuing assessments for under-declared output tax over actors but we know the matter is going to Tribunal so watch this space. If you have any clients who may be affected by this change in Policy by HMRC then please do not hesitate to contact us.
New fuel rates have been announced with effect from 1st February 2007. The rates are used for PAYE purposes but are also advised by HMRC to be applicable when calculating the VAT on the fuel element of reimbursed private mileage for employees. Unfortunately the rates are lower than previous years.
We have recently won a longstanding case where the VAT at stake was £9.3 million and involved a supply of goods from outside the EU being imported into the UK and then subsequently transferred to the customer in the EU. In these circumstances it is possible to avoid paying Import VAT providing certain conditions are met.
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