Latest News

Exemption of supplies of staff to care homes

The CJEU has released its judgement in the German case of Go Fair Zeitarbeit OHG, which dealt with the VAT treatment of supplies of staff to care homes and similar businesses.

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Security Request From HMRC

In the VAT Appeal of Mistral Promotions & Marketing Limited, the VAT Tribunal dismissed an appeal against the issue of a Notice of Requirement of Security payment to reflect a previous VAT debt and non-compliance of a company under similar ownership, and carrying out similar activities, to the Appellant. Although, the Judge stated that HMRC’s decision was flawed for a lack of reasoning and for failure to consider whether an appeal against an assessment issued against a previous company had been withdrawn it was inevitable that the Security would still be required and the Appeal was dismissed.

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Electricity provided in holiday accommodation cannot be separated from the hire charge

The Upper Tribunal has confirmed that an additional charge for electricity that was included in the price of holiday accommodation by Colaingrove Limited could not be split out for VAT purposes. The Tribunal Judge ruled that the whole charge for the accommodation, including the electricity charge, attracted VAT at the standard rate. The First-tier Tribunal had previously ruled that the supply of electricity could have been treated separately for VAT purposes with any charge attracting the reduced VAT rate (5%). The appeal was in respect of charges for electricity by the Appellant at its holiday parks where the holiday makers had to pay the charge as part of its hire charges.

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Going Up – The VAT Threshold

Finally, the usual favorite change in the VAT registration thresholds has occurred as from 1 April 2015 the VAT registration threshold will be increased from £81,000 to £82,000 and the de-registration threshold from £79,000 to £80,000.

Foreign Bodies and Exempt Supplies

As a further example of how complex VAT can be especially for businesses that make exempt supplies, any that make exempt financial services supplies and have foreign branches based outside the EC can no longer include the foreign branches turnover when carrying out partial exemption calculations.

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Hospices, palliative care charities and Motor Cycle courier charities

It was no surprise that this budget was a pretty quiet affair from a VAT perspective, after all no chancellor worth his salt would be likely to do anything exciting such as increasing the VAT rate pre-election, so the VAT changes are relatively restricted and are good news for some organisations such as hospices.

Hospices and palliative care charities will now benefit from being able to recover VAT on non-business costs from 1 April 2015 onwards in the same way that NHS trusts can do so. It is not yet clear if this will include VAT on all costs where the care is funded by the government via NHS contracts or if this VAT will remain irrecoverable if the hospice operates under a contract to supply services to the NHS. The reason why this is unclear is that the draft legislation is not yet online and the TIIN issued mentions VAT recovery for costs of care paid for by voluntary donations and public funding but not for paid services.

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Why does it take so long to hear from HMRC?

Have you ever wondered why it takes so long to gain a response from HMRC to a simple query or an issue a VAT inspector is dealing with you or your client? The reason for this is that most correspondence with and from HMRC is now sent to or from ‘drop addresses’ nowhere near the location of the person being written to or responding to correspondence from the tax payer.

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VAT Training

The VAT People provide in house bespoke VAT training services aimed at ensuring that costly VAT accounting errors are avoided and also adds to the bundle of evidence of reasonable care that is necessary to be able to prove if an error has occurred and HMRC are seeking to apply penalties. This makes investing in training cost effective.

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Even Tax Authorities find VAT Rules Difficult to Interpret

The European Court has found against the Luxemburg government in a case involving the supply of e books. In the UK printed publications are zero rated for VAT whereas e publications are standard rated and this has been the cause of lobbying for zero rating to also apply to e books. The obvious issue being that users of e reading devices such as Kindle and the like pay VAT to read a book on the device that they can buy VAT free as a hard copy from a book store.

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VAT recovery on white goods?

The First-tier Tribunal has delivered a further decision in the appeal of Taylor Wimpey Plc in respect of a refund of VAT paid on white goods and other items included when new homes were sold. In the first decision in the case, the Tribunal was asked to consider the validity of the blocking order, which prevents developers constructing new dwellings for zero-rated sale from reclaiming input tax on the purchase of things like fridges, freezers, carpets etc. HMRC refused the claim on the basis that the input tax had to be offset by the output tax on the claim items. Agreeing with HMRC, the tribunal decided that the Appellant was not entitled to recover input tax on the claim items without offsetting the output tax. As the items were sold at a profit, the offset reduced the claim to nil and the appeal was dismissed.

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