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Businesses supplying digital services to Consumers across the EU

Businesses that supply digital services to consumers across the EU will be able to register for the mini one-stop-shop from 20 October 2014. This means they will not have to register for VAT separately in each country where they do business. From 1 January 2015, the place of taxation of digital services to non-business customers will be where the consumer is located, rather than the supplier.

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The VAT rate of books to change?

The ECJ has delivered its judgment in the Finnish case of K OY in respect of the VAT liability of books supplied on an electronic format. The Court has decided that EU law permits different VAT treatments for paper books and e-books as long as the differing treatments does not breach the EU law principle of fiscal neutrality (goods that are “similar” from the point of the “average consumer” must be taxed at the same rate). The CJEU suggested that "if what matters for that consumer is essentially the similar content of all books, regardless of their physical support or characteristics, the selective application of a reduced rate of VAT is not justified." This suggests that differing VAT rates for e-books and paper books cannot be maintained if the key consideration for the consumer is the content and not the method in which that content is delivered.

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VAT on cross border services

The European Court of Justice (ECJ) has ruled that Swedish insurer Skandia is liable to pay VAT on cross-border services. The decision may potentially mean financial institutions would be subject to VAT for operations supplied between a group’s headquarters and its branches.

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Card handling services go to Europe

The long running dispute between HMRC and Bookit Limited has been referred to the ECJ for guidance. Bookit provides a card processing service for Odeon Cinemas, a company that it is a subsidiary of, and receives a handling fee where cinema tickets are booked online or by phone. In order to accept a payment Bookit undertakes various actions including verifying and processing credit or debit card transactions and acting between the card holder and the card provider. Bookit then passes the payment for the booking less any bank charges and its own processing fee to Odeon.

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Default Surcharges - Inability to pay is not always a reason for HMRC to impose the penalty

Where a business submits more than one late VAT return (or pays one VAT return late) it will incur a financial penalty on a sliding scale rising from 2% of the VAT for the second late return to 15% for the fourth late return and any subsequent ones in the following four quarters. Unfortunately as many businesses find HMRC are unsympathetic to arguments that lack of ability to pay should be taken into account, and in fact the VAT law states that inability to pay is not an excuse.

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Supplies of Education - VAT Exempt or Not

VAT is a complex area for many organisations, not least those that provide supplies of education services. In order to meet the criteria for exemption certain conditions must be met such as being the correct ‘type’ of body to be able to make exempt education supplies, and supplying the correct ‘type’ of services. In addition it is possible for goods and services that are not in fact a supply of education in their own right but are supplied in connection with education services to also qualify for exemption.

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Zero-rating – Construction of a new building

The VAT Tribunal appeal of Boxmoor Construction Limited relates to a case where a contractor was instructed to create a single storey and a two storey extension to an existing dwelling. In the end, the works also involved the removal of the entirety of the exisiting dwelling with the exception of a small portion of the front façade. The Appellant believed that it was constructing a new dwelling and therefore its supplies qualified for zero rating, for VAT purposes.

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EU VAT refunds for UK businesses

If your client is registered for UK VAT and as has incurred EU VAT during 2013, the deadline to submit a valid claim to recover the VAT incurred in the EU state in question is 30 September 2014. Any claims submitted after 30 September 2014 will not be processed. Submitting a valid EU VAT refund will reduce the burden of purchasing goods and/or services from other EU Member States.

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E-bay trader jailed

A recent sentence laid down by the UK Courts provides a warning for all online traders.

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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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