Latest News

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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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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