Monthly Newsletter - October 2007

In this issue:

• Business Brief 50/07
• Business Brief 60/07
• Around the Tribunals
• Late VAT Payments
• Input tax on Management Services
• VAT and the Flat Rate Scheme
• Penalty for late submission of EC Sales List
• Motor Vehicles sold zero rated
  

Business Brief 50/07

HMRC have published VAT Business Brief 55/07, it sets out their new policy relating to the VAT treatment of computers made available by employers to their employees under the home computing initiative (HCI). Although there would be private use of the computer, HM Revenue & Customs allowed full VAT recovery as long as there was some business use. As a consequence of withdrawal of the HCI tax exemption from the 13 August 2007 full VAT recovery without adjustment for private use has been withdrawn. In future an apportionment must be made. The amount of VAT at risk may not be large this will clearly be an issue that VAT officers will be looking for in forthcoming inspections.

back to top

Business Brief 60/07

Business Brief 56/07 covers the consultation relating to “Lennartz Accounting” regulations that were due to come into force 1 September 2007 but have now been delayed until 1 November 2007.These regulations will apply when a business allocates an asset wholly to business purposes and recovers the VAT charged upfront but can account for VAT on any non business use in subsequent VAT returns. Previously the life of an asset of this nature was considered to be 25 years but the new regulations will limit this to 10 years.  If this method has already been employed we suggest that it reviewed so that the effects of these new regulations can be considered.

back to top

Around the Tribunals

Business Brief 58/07 is HMRC’s reaction to claims of overpaid output tax from fund managers following the JP Morgan Fleming Claverhouse trust Plc.  HMRC consider that this case only affected investment trust companies (ITCs) and they will refuse to accept any other claims under this case.

back to top

Late VAT Payments

HMRC have published this information sheet which affects suppliers of medical prescription goods that are liable to VAT at the standard rate and the suppliers are not retail pharmacists. For example companies supplying Stoma and Incontinence care products that are delivered to patients homes. HMRC have been concerned that these suppliers have not accounted for VAT on these goods at the correct time. They have been waiting until they have been paid from the Prescription Pricing Authority (PPA).Whilst this treatment has technically led to a delay in the declaration of output tax, HMRC have accepted the problems experienced and are prepared to allow the declaration treatment to continue but this is dependant upon formal approval being given. Any supplier that is involved in this type of supply must write for approval as soon as possible.

back to top

Input tax on Management Services

In this case the Appellant claimed input tax on management services. However, HMRC contested this based on insufficient evidence that the management services had in fact been supplied.

The Tribunal needed to determine whether on the balance of probabilities a supply of management services had in fact taken place.

The Tribunal found that they had taken place and allowed the Appeal.

back to top

VAT and the Flat Rate Scheme

This case surrounded HMRC’s decision to withdraw authorisation for the Appellant to use the flat rate scheme as the appellant was associated with another company. The Tribunal needed to determine whether the Appellant and the associated company were closely bound to one another by financial, economic and organisational links.

The Tribunal decided that HMRC’s decision was reasonable and the appeal was dismissed.

back to top

Penalty for late submission of EC Sales List

The Appellant was appealing against a penalty imposed for its alleged failure to file its EC Sales List on time.

The Appellant claimed that the form had been sent on time and that it must have been lost in the post.

The Tribunal felt that this case was hampered by the Appellants absence at the hearing and the appeal was dismissed.

back to top

Motor Vehicles sold zero rated

The Appellant sold 5 vehicles to a purchaser in the EU who supplied an invalid VAT number. The question before the Tribunal was “did the Appellant take all reasonable steps?”

The Tribunal concluded no and dismissed the appeal.

 back to top

For further information regarding any of these articles or any other VAT issue,please phone us on 01962 735350 or e-mail us at: vat@thevatconsultancy.com