July 2010
Under the Spotlight
The Public Sector
Following the new coalition government's decisions on public spending announced in last month's emergency budget, we know that there is likely to be a new raft of VAT issues giving this sector a headache in the months to come:
- The introduction of of state-funded independent schools will mean that charity VAT rules will need to be considered.
- With budgets being set later in the year this may impact on Local Authority outsourcing.
- BSF has been cancelled - we await to hear the coalition government's plans
on school building projects.
Resident Blogger, Zaenia Rogers, discusses the new VAT issues facing the public sector with our Public Sector Director, Steve McIntyre.
Some Good News for Charities
Charities and other Not-for-Profit organisations paying web-based search engines, which link users to the charities web-site, have been confirmed as zero rated advertising services when supplied to charities. Charities which have, up until now, been charged VAT at the standard rate on such Pay Per Click arrangements have overpaid VAT and should now seek to obtain repayment of this overpaid VAT.
Coming at a time when Charities and the Not-For-Profit sector are being faced by reduced grant funding sources, along with the increase in the standard rate of VAT with effect from 4 January 2011, charities should consider making appropriate claims. Any refund will benefit the charity by making a direct and immediate contribution to the cash funds of the charity.
For more information on how to make a claim please contact Karen Mulcahy.
Don't forget to file and pay your VAT online!
With first quarterly returns due to be filed online on 7 August 2010, HMRC are reminding businesses of the mandatory requirement to file and pay their VAT online.
HMRC News Round-up
New Penalties for Failure to Notify
H.M. Revenue & Customs have produced a Business Brief 30/10 explaining that failure to notify penalties come into effect from 1st April 2010. The amount of the penalty is potentially the tax that is unpaid at a specified date or the potential lost revenue and rates range from 10% to 100%.
H.M. Revenue & Customs Brief 29/10
This Brief announced a change to the treatment of claims received by HMRC in respect of holiday homes. HMRC now accept that under the DIY Housebuilders and Converters Scheme the construction of new holiday homes and the conversion of non-residential buildings into holiday homes are now eligible for a VAT refund.
Our consultants can tell you more - click here
European VAT
The EU Commission has decided to refer several Member States including the United Kingdom to the EU Court of Justice with regard to the failure to implement VAT grouping rules. VAT grouping is allowed for the purpose of administrative simplification and treat businesses linked as one single taxable person but United Kingdom HMRC allow non-taxable persons to join a VAT group. The EU consider this not to be possible so if you are thinking of VAT grouping contact us now
VAT and Duty
Romania raises its VAT after a Court ruling. The Romanian Government has decided to raise the standard rate of VAT from 19% to 24%.
News from the VAT Tribunals
In R P Griffin and D M Griffin (TC00521) a Default Surcharge was overturned and the effect of this applied to earlier surcharges which were under appeal. The moral of the story is that Default Surcharges are an appealable matter and should always be reviewed to see if there is a reasonable excuse. Insufficient funds is not a reasonable excuse but if the underlying cause of the lack of cash is, for example a bad debt, then this could very well be an excuse to have the penalty withdrawn.
Please contact us if you have clients who have been affected by Default Surcharges.
ERF Limited (TC00537)
This was an appeal in respect of the dishonesty of the Financial Controller of the appellant’s Company and confirms that while the dishonesty in question was one of the Company’s officers, the Company had a responsibility to ensure that its returns were not dishonest and it did not dishonestly evade VAT. Accordingly the Tribunal went on to say that a Company must ensure that through its officers it does not act in a dishonest manner.
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