Do it yourself builders scheme: holiday homes
In the past, HMRC have rejected such claims, but have been forced to change their view as a result of a recent VAT Tribunal. Claims can now be made which are up to four years old, and even older in some limited circumstances.
Company cars - advisory fuel rates from
1 June 2010
For further details on company cars, use the link below www.hmrc.gov.uk/cars/advisory_fuel_current.htm
VAT changes on postal services
Following HMRC’s Revenue & Customs Brief 19/10, regarding the changes to HMRC’s policy on the exemption of postal services, Royal Mail have provided information on the products that will remain exempt and has detailed those products that will become subject to VAT. There are still a few services for which the VAT liability is to be determined, however, the current guidance can be found here.
VAT payments by cheque – important changes with effect from 1 April 2010
From 1 April 2010 all cheque payments sent by post will be treated as being received by HMRC on the date when cleared funds reach HMRC’s bank account rather than the date on which HMRC receive the cheque. Businesses must therefore allow enough time for their payments to reach HMRC. Cheque payments take three working days to clear HMRC’s account.
New VAT wrongdoing penalty
From 1 April 2010, HMRC will apply a new wrongdoing penalty; where a person issues an invoice that includes VAT which that person is not entitled to charge.
The penalty charged will be a percentage of potential lost revenue, such as the amount of VAT on an unauthorised invoice.
The following penalty summarises the penalties that could be levied:
Reason for wrongdoing |
Disclosure |
Minimum penalty |
Maximum penalty |
Reasonable excuse |
|
None |
None |
Non-deliberate |
Unprompted
Prompted |
10%
20% |
30%
30% |
Deliberate |
Unprompted
Prompted |
20%
35% |
70%
70% |
Deliberate and concealed |
Unprompted
Prompted |
30%
50% |
100%
100% |
Change in VAT rate - anti-forestalling legislation
Businesses should be aware that legislation is in place to levy a supplementary VAT charge of 2.5% on certain supplies of goods or services on which VAT has been accounted for at 15%.
The purpose of the legislation is to prevent schemes that attempt to account for the 15% VAT rate relating to goods or services that are supplied on or after the VAT rate returns to 17.5% (i.e. 1 January 2010).
The legislation applies in the following circumstances:
- the supplier and customer are connected parties
- the supplier funds the purchase of the goods or services
- a VAT invoice is issued by the supplier where payment is not due for at least six months
- a pre-payment of more than £100,000 is made before the change in rate relating to the goods or services which are provided after the change in rate, unless the pre-payment is made in the course of normal commercial practice.
Where the legislation applies, a supplementary VAT charge of 2.5% will be due on supplies of goods or services on which VAT has been accounted for at 15%.
Changes to the 8th Directive VAT EU VAT refund claims
From 1 January 2010, there will be a number of changes regarding the procedure for making 8th Directive VAT EU Refund claims.
The changes will impact those taxable persons who incur VAT in another EU Member State, provided the taxable person is not already VAT registered in that Member State.
The changes to be made are as follows:
- claims will now have to be submitted in the country in which the claimant is VAT-registered. This will require the UK business to register through the Government Gateway. Previously, a business could only submit claims in the country in which the VAT was incurred
- claims will be submitted in an electronic format rather than the paper format. This will remove any potential language barriers, since previously, when submitting claims in paper format in another country, the form may have been written in a foreign language making it very difficult for UK businesses to complete
- the deadline for submitting a claim will be nine months after the end of the calendar year. Previously, the deadline was six months after the end of the calendar year
- in any given year, a business is able to make a maximum of five claims to each EU Member State where VAT has been incurred
- the authorities have four months in which to process the claim once received. If processed with no issues identified, the claim must be paid within ten days of the form being processed. If the authorities have any queries, a further four months can be given to the authorities to process the claim
The changes above only relate to 8th Directive refunds. The procedure for 13th Directive claims (Non-EU businesses) remains the same.
VAT accounting arrangements for businesses operating beyond midnight on 31 December 2009
HMRC have provided guidance for businesses that operate after midnight on 31 December 2009 and would be affected the change in VAT rate back to 17.5% on 1 January 2010.
In particular, pubs, clubs, restaurants and mobile telephone companies are likely to be affected.
Essentially, HMRC will allow businesses that operate overnight to account for VAT at 15% on takings received up to the earlier of:
- the end of trading of the 31 December session or
- 6am on the morning of 1 January 2010.
For businesses to be able to enjoy this treatment, a number of conditions must be satisfied. These conditions along with further details can be found in the following Revenue & Customs Brief (68/2009).
For more information on any of the above details, please contact a member of the VAT team of Horwath Clark Whitehill who would be happy to advise you.
