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
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.