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Monthly Newsletter - July 2007
Changes to Advisory Fuel Rates With effect from 1st August HMRC have published new advisory fuel rates which will be reviewed by them again if the fuel prices vary by 10%. The current prices used in the calculations are 96.6p per litre for unleaded, 97.2p per litre for diesel, and 46.2p per litre for LPG. HMRC accepts that these figures may be used for VAT recovery purposes although employers will still need to retain receipts in line with the current legislation. For full details of the key rates, click here.
HMRC has revised the policy on input tax recovery in respect of the cost of staging shows for which theatre admissions are VAT exempt. This follows the judgement of the Court of Appeal in the case of Mayflower Theatre Trust and further details of the new policy can be obtained by making contact with your usual consultant. All VAT exempt Theatres and similar organisations will be affected.
Reduced Rate for the Supply and Installation of Mobility Aids for the Elderly Note that with effect from 1 July 2007, the supply and installation of certain mobility aids will be eligible for the reduced rate of VAT of 5% when installed in domestic accommodation occupied by a person aged 60 or over at the time of supply. Clearly this will affect contractors and builders who supply such aids and we will be pleased to provide further details of the items that are applicable. Revenue & Customs’ Brief 47/07 gives further information as well.
Exemption for the Supply of Staff by one College to another The ECJ was asked to look at the exemption under Article 13A(1)(i) of the 6th Directive when the tax payer supplied a teacher to another similar establishment to carry out temporary teaching duties under responsibility of the host establishment. The ECJ ruled that these supplies were still services “closely linked to the provision of education” and therefore the exemption should apply.
Take Care when Reclaiming VAT on Costs! In this case, legal services were incurred by the three directors in connection with their activities as directors of the Company but invoices were issued to the Company for input tax recovery. The Tribunal ruled that in these circumstances the directors were responsible for instructing the legal providers and it was only they and not the Company that could recover the VAT. The moral of the story is care should be taken when reclaiming VAT on costs as they may not be eligible.
Do Your Invoices explain your VAT Position Clearly? This case involved a partnership who started their business and ordered stationery and invoices from a friend who was a printer. He printed invoices containing, at the bottom, the phrase “Net plus VAT = Total” even though the partnership was not registered for VAT. Clearly they did not think of all the implications to the wording of their invoices in respect of VAT. They were assessed for the VAT shown on these invoices of over £7,000 and lost their case at a VAT Tribunal. The moral of the story is that great care should be taken in looking at the layout of invoices to ensure that they accurately explain the position with regard to VAT.
Caught in a TOGC Trap This is another case of a transfer of a going concern where the seller was registered and trading above the registration limit. The purchase then becomes immediately registerable for VAT on the date of transfer but in this particular case Customs finally registered the appellant 4 years and 8 months later. The Tribunal ruled that while they had distinct concerns over the delays taken by HMRC, the registration date was correct in law but they mitigated the penalty to nil.
And finally.... Beware of the "Street Sweepers"! This is a case involving an unregistered business where the Tribunal heard the appeal but the appellant did not appear and was not represented (which to us appears to be a waste of time). However, the interesting point is that the tax payer was identified by the Joint Shadow Economy Team which looks at unregistered businesses carries out what is known as a “street sweep” checking all the businesses in a particular street against Customs’ own database. Unregistered businesses should continually monitor their turnover to avoid penalties and interest for late registration.
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