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The VAT refund Scheme for museums and galleries

Museums and art galleries are a great resource during school holidays (and other times of course) especially ones that allow free access. The problem for such bodies though is that free access equals non business use and non-business use equals restricted ability to recover VAT on costs.

There is a VAT refund scheme that allows certain museums and galleries to recover VAT on costs associated with collections where they allow the public free viewing access. All the museums and galleries are named on a list which has now been extended to include the V&A Museum of Design and the Dundee and Embrace Arts Centre, which is the University of Leicester’s art centre. In addition the National Coal Mining Museum for England, which was previously included as part of the Science Museum, is now listed as a separate institution.

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Cultural exemption - certain services or all services?

The Upper Tier Tribunal has just released its decision in the case of the British Film Institute (“BFI”). This decision is a significant one for certain organisations that provide cultural services but are presently obliged to charge VAT on admission prices/ticket prices etc. It is also useful in further clarifying the scope for exemption applying to sporting services and indicates how future decisions which might turn on the phrase “certain services” used in EC and UK legislation are likely to progress.

The BFI is a not for profit organisation that has Royal Charter requiring it to act in the public interest. It had lodged a claim for VAT of £1.2m in 2009 on ticket sales to films shown at its theatre and film festivals on the basis that it had accounted for VAT on supplies that were properly exempt as all cultural services were exempted from VAT under the Sixth VAT Directive 77/388/EEC (‘Sixth VAT Directive’), art. 13(A)(1). The films screened were ‘art house’ rather than main stream mass entertainment films.

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Do you understand the complex rules for VAT and exempt bodies?

Recent case law and changes to HMRC’s perceived view of VAT on services provided by charities and other public bodies highlights what a mind field VAT can be. In the case of charities and public bodies they are likely to have non business income from donations, VAT exempt income from entrance fees and fund raising events and commercial VATable income from sales of goods, café takings etc. All this can mean that accounting for VAT becomes a real headache for the organisation. Here at the VAT People we can help!

We offer a range of training services from bespoke half or one day training sessions intended to clarify the mysteries of VAT accounting for the charity or public bodies team, to our fairly unique one on one training and review sessions.

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Approval of new 10% reduced rate in Czech Republic

The Czech Government has issued a further reduced rate of VAT of 10%, which will be commence from 1 January 2015. The new rate of VAT will apply to foodstuffs, medication for humans and books.

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Sweden refers question to the ECJ on virtual currencies

In the case of Skatteverket v David Hedqvist the Swedish courts have referred questions to the ECJ on whether the exchange of virtual currencies, for eaxample Bitcoin, constitutes a supply for VAT purposes and, if the currencies do constitute a supply, then whether that supply is exempt from VAT.

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E Service Providers -Are you Ready for Major Changes to VAT

It may sound a long way off but the One Stop shop for e-service provider opens for business on 1 January 2015. This will effect any businesses in the telecoms, broadcasting or e-service sector. Whilst many accountants will not deal with broadcast company's the rise of smart phones means that accountants whose clients sell apps including games and ebooks will be effected.

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E Retailers - Do you want to avoid substantial VAT costs?

Ebay, Amazon and online shops have grown at a phenomenal rate in the last few years with new start up businesses often rapidly exceeding the VAT registration threshold. Whilst it is great that the internet allows people to start a business with low overheads as they often don't have physical premises, it does have some downsides. The main one being that many online retailers misunderstand how they are expected to account for VAT by HMRC, especially those who rely on 'advice' gleaned' via online forums.

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Taxpayer loses in “white goods” VAT claim - maybe

The First-tier Tribunal has delivered its “preliminary matter” decision in the case of Taylor Wimpey plc, in which the taxpayer, who was a representative member of a VAT group that included a number of speculative builders, was seeking a refund of VAT paid on “white goods” and certain other items included when new homes were sold. The appellant sought repayment of nearly £61 million, but there is a question that is yet to be resolved over whether the increase was a new (time barred) claim as opposed to an extension of the earlier one. The Tribunal judge was asked to consider the underlying technical issue, the validity of the so-called “blocking order”,

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Time limits for assessments – out of time

In the VAT appeal of Temple Retail Limited, the Appellant accepted that it had made an error by not recharging certain costs to an associated company. The issue before the Tribunal was whether the assessment was made more than one year after “evidence of facts, sufficient in the opinion of the Commissioners to justify the making of the assessment, came to their knowledge” and thus whether it was out of time.

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HMRC issue Brief in respect of changes in policy on TOGC’s

Following its consideration of the FTT decision in Robinson Family Ltd, HMRC has issued their brief 27/2014 announcing three shifts in policy in relation to the rules surrounding the transfer of a business as a going concern (TOGC). The changes are as follows:

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