June 2011
Under the Spotlight:
Partial Exemption – the simple truth!
With the revision of Notice 706 partial exemption and as one of the complex areas of VAT we frequently help businesses with, Steve McIntyre uncovers the truth about partial exemption and provides some simple rules every partly exempt business should follow. Read his blog.
Have you booked your place?
We have teamed up with Action Tax to bring you are latest online seminar on Tuesday 12th July at 12.00pm.
Threats & opportunities in the world of employer compliance
VAT & the latest on penalties
The PAYE and National insurance regimes have undergone significant changes over the last 10 years but everything up to now pales into insignificance compared to the proposals being implemented over the next three years.
Paul Coombes of Action Tax will provide you with the information you need to know to prepare for these changes, an update following on from the spring budget and practical advice on the present threats from HMRC in the world of employer compliance.
In addition, John Crawford will bring you up to date with the latest VAT news, focusing in particular on penalties.
If you would like to attend either of this event, please email us at vat@thevatconsultancy.com and we will send you registration details.
This month on The VAT Blog
A glimmer of hope for FAs?
With all the recent commentary on the issue of whether financial advisors are required to charge VAT on their fees to clients, Julie Park, looks at the issues.
Read the blog
A temporary cut in VAT – would it be enough to stimulate the economy?
With the recent news that Shadow Chancellor, Ed Balls is urging the government to temporarily reduce the rate of VAT to stimulate the economy, Karen Mulcahy looks at all the angles. Good news dare we say it for VAT advisors, but would it be good news for the economy?
Read the blog.
Effective date of registration is critical!
A recent Tribunal Case has highlighted the pitfalls when seeking VAT registration and ensuring the correct date of registration is applied for.
Read the blog
Tribunal Decision is a swing in the right direction
Richard Staunton takes a look at the result of the Bridport and West Dorset case.
Read the blog
Are you accepting face value?
It is sometimes wise not to accept what you first see or what you are first told as Karen Mulcahy reveals.
Read the blog
Will the travel industry be paying more VAT?
The Department for Transport is shortly to consult with the travel industry on extending Atol protection to dynamic packages eg packages involving a flight plus hotel accommodation. Julie Park looks at the detail.
Read the blog
HMRC News Round-up
Details of various consultations have been published:
- Establishing the future relationship between the tax agent community and HMRC
- Tackling VAT evasion on vehicles bought into the UK permanently
- Notice 708: Buildings & Construction
- Notice 708/6: Energy Saving Materials
- Fuel & Power
- Water Sewage
- High Risk Tax Avoidance Schemes
Revised Notice 714: Zero rating young children’s clothing & footwear.
The main changes are:
- the scope of the term “fur skin”
- the eligibility of fur-lined headgear for zero rating
- collars and cuffs can be zero-rated
- liability of items of clothing for children’s organisations
Revised Notice 706: Partial Exemption
A revised Notice 706: Partial Exemption has been issued. The main changes are:
- changes to simplify the standard method
- changes to simplify the de-minimis rules
- the combined business/non business and PE method
- changes to the Capital Goods Scheme and clawback/payback rules
News from the Tribunals
A number of cases have come to our attention recently which we will be exploring in-depth on our Blog in coming weeks. Others to note are:
Eastwell Manor Ltd
In this recent default surcharge case, where the Tribunal found that a 15% surcharge amounting to £18,453 was not disproportionate, the Tribunal made some interesting comments about a letter which is being issued by HMRC in surcharge cases. HMRC state in the letter that taxpayers cannot appeal simply on the grounds that they consider that the surcharge is too severe. They say that the rates of surcharge are laid down in the law and therefore an appeal can only be made on reasonable excuse grounds or where the taxpayer can demonstrate that they had a reasonable expectation that the return and/or payment would be received by HMRC by the due date. The Tribunal comments that these statements are incorrect as a matter of law and could lead some taxpayers to believe that proportionality cannot be considered by the Tribunal.
We would suggest that it pays to check the accuracy of letters from HMRC – they may not always be correct.
Although the Tribunal can indeed consider the issue of proportionality in relation to default surcharges, they do not always find for the taxpayer in these cases even where they may consider the penalty ‘harsh’. Each case has to be dealt with on its own facts and merits. If you have been receiving surcharges and wish to discuss the possibility of appealing please contact us.
Reed Employment
This recruitment agency supplies temporary workers to other businesses (the client). Reed paid the temp and undertook PAYE and tax payments for the worker but recoup this payment from the client plus their “commission” fee. HMRC considered that Reed were supplying staff and as such were acting as a principal and not an agency therefore the total payment received from the client was liable to VAT at the standard rate. Reed lodged a refund claim arguing that VAT was only due on their “commission”.
HMRC refused the claim and Reed appealed. Although the case was primarily about the position of the refund the Tribunal ruled that the supplies made by Reed were introductory and ancillary services and VAT was only due on the “commission” element. HMRC have not challenged this decision but it clearly has an impact on the recruitment sector as a whole especially VAT exempt or partially exempt clients who cannot reclaim all the VAT on the current charging regime.