October 2010
Under the Spotlight 
Countdown to the VAT rate rise
With the forthcoming change to the increase in VAT on 4th January 2011, businesses should now be looking at their business strategy with the run up to the VAT rate change and retailers in particular should decide on their pricing structure for Christmas bearing in mind the anti-forestalling legislation.
This prompted an enquiry recently on our “Got A Question” feature on our website about the order for a new motorhome due for delivery in April.
Read our Blog to find out more….
Case Study
Been Challenged by HMRC? Always get it in writing!
We have recently been involved with a successful complaint to the Revenue Adjudicator on behalf of a client.
Read more here
Error Correction
It is now more important than ever to make sure that errors in VAT accounting are appropriately corrected. Errors under £10,000 (or up to £50,000, but not more than 1% of the Box 6 figure), which are considered ‘careless’ may be adjusted on the next VAT return. All other errors, including those considered to have been ‘deliberate’ are to be disclosed directly to HMRC.
If a business wants to have the opportunity to mitigate the impact of any penalty that may be applied, errors adjusted on a VAT return must also be notified to HMRC.
Interest may also be applied!
Of potential greater concern is that penalties may be applied where an incorrect or unnecessary error correction is made. If the unnecessary correction is considered careless, any subsequent corrective action may also be considered careless, with the potential for a further penalty!
The combination of the error correction process along with the penalty regime makes for a complex mix of considerations. If you are concerned about how to deal with error correction or adjustments to VAT accounting contact us at The VAT Consultancy.
Not-For-Profit – New Construction – Application of the 95% rule for Zero Rating
There has been much media coverage within the VAT world concerning the withdrawal of the previous non-business use concession for charities constructing new buildings. In summary, it used to be possible to zero rate the construction of a new relevant charitable purpose property, if it’s use was 90% or greater for non-business purposes. This concession has been removed. The not-for-profit sector may now only receive zero rated construction service where the resulting property is to be used at least 95% for non-business purposes.
We have recently advised on the construction of a relevant charitable purpose structure which achieves the zero rate in respect of over 75% of the construction costs – resulting in a significant saving for the charitable body.
For more information on how we can work with you to achieve similar VAT savings, contact us.
HMRC NEWS ROUND UP
Supplies of Nursing Auxiliaries and Care Assistants by State Regulated Agencies
With effect from 1st October 2010 the legal requirement for nursing agencies to be registered under the Care Quality Commission will cease and responsibility for quality standards will pass to those organisations that provide the regulated activity. By concession HMRC now accept that where employment businesses are registered the supply of nursing auxiliaries can be exempt for VAT.
Again we will be happy to provide specific advice to individual businesses who may be affected by these changes.
Revenue Customs Brief 37/10
VAT on Leisure Trusts providing all inclusive membership schemes
You will recall that with effect from 1st April 2009, HMRC amended its interpretation of the law and therefore its guidance on the VAT treatment of membership schemes allowing unlimited access to leisure facilities in a leisure centre. H.M. Revenue & Customs Brief 37/10 supersedes previous Briefs on the subject and sets out in further detail the effects of the changes and the impact for such issues as Partial Exemption and the Capital Goods Scheme.
Steve McIntyre will be happy to provide further advice if you see these changes affecting your business.
NEWS FROM THE TRIBUNALS
VAT and Taxis
Albion Taxis Limited (TC00671)
This is a typical case involving whether the company acted as principal or agent for cash customers and account customers.
This is a well trodden path and illustrates the need to have supporting documentation if the Taxi business is seen to be acting as principal for account customers or agent for cash customers.
VAT windfall for EMI
The ECJ has ruled this week that the long running case brought by EMI against H.M. Revenue & Customs in respect of the VAT treatment of CD promos and other business samples was incorrect. The effect for EMI is that they no longer need to account for VAT on promotional material and therefore a claim for overpaid VAT will be due.
If you have clients who provide promotional material in whatever trade sector, then following the EMI case they will be entitled to a refund of VAT.
We will be happy to provide specific advice.
Introducing The VAT Blog
As part of our commitment to provide you and your clients with the best advice possible, we’d like to introduce you to The VAT Blog.
Not only will you be able to read topical articles and get best practice advice but it is also your opportunity for discussion and to get an objective sounding board on any VAT matter.
Feel free to introduce it to your colleagues and clients – we would love to hear from them!