|
|
|
|
»
Budget News |
|
As anticipated the Chancellor’s Budget was fairly quiet on the VAT front with many of the measures announced specific to certain businesses. In brief measures introduced include:
• Expansion of Disclosable VAT avoidance schemes to include 2 new listed schemes and 1 new ‘hallmark’ scheme. The additional listed schemes are in relation to exploitation of EU differences on vouchers and attempts to remove the effect of the option to tax. The hallmark scheme relates to schemes that make use of face value vouchers with low redemption rates.
• Partial Exemption Special Methods – 4 new housekeeping measures introduced.
• Extension of Unjust Enrichment rules.
• Introduction of 5% reduced rate for advice and information provided by Charities that promote the health and welfare of children, the elderly or disabled people. This applies to goods and services not already exempt and thus, does not affect the VAT treatment of care services.
• Raising of registration and deregistration limits to £60K and £58K respectively.
• Usual increase in fuel scale charges
• Certain changes to Customs Warehouse
regime.
For further details on
the Budget please contact any of the BA
Team.
Back to top
|
» Mileage
Allowances:
Update |
We received some good responses from
this article and the issue is now even
more pressing given that since then the
ECJ has found against the UK.
David Miller states:
“Whilst C&E have yet to comment on what
they will do we expect that changes are
imminent. To ensure continued benefit on
mileage claims businesses need to take
action now to put the right purchasing and
accounting procedures in place”.
Contact: Any of the BA
Team on 0870 420 8971.
Back to top
|
|
|
» Charities: Action Required
to Save VAT on Two Fronts |
1. Buildings
Further to our recent mailer, an
opportunity exists to claim
retrospective zero rating for up to
3-years where a Charity has
incurred VAT on construction of a
building it uses. The issue
surrounds whether the use is ‘nonbusiness’
and the Tribunal held
that just because a Charity levies a
charge, it does not necessarily
mean that the Charity is in
business.
Rob McCann comments: “We see
this judgment as a major decision
in that it critically questions
Customs approach to Charities
and non-business. But urgent
action is required to ensure that
this benefit is secured”.
Contact: Rob McCann
and David Miller
2. Fundraisers
Following a recent case we have
dealt with, action should be taken
to review how Charities structure
their activities where professional
fundraisers are employed. This is
because if it is unclear what contractual relationships exist,
Customs can, will and have
assessed for VAT on fundraisers
fees even if the amount collected is
not the fundraiser’s remuneration.
This is particularly costly if the
Charity is not VAT registered as
the tax burden is a sticking cost to
either the Charity or the
fundraiser.
BA VAT comment: “By
reviewing how a Charity organizes its affairs,
unnecessary and costly problems can be avoided and
very often we find other savings can be identified
and made. Call us now to avoid unnecessary
issues”.
Back to top
|
»
Ensuring Exemptions Apply: Cultural and
Sporting |
Take Action Now!
Recent cases we have dealt with and
several Tribunal judgments have
highlighted the need for regular
reviews of Cultural & Sporting
Exemptions.
BA VAT comment: “If
exemption criteria are not met then
VAT is applicable to admission
charges or sporting charges such as
membership and playing fees. Whilst
this is sometimes advantageous in tax
planning, it very often is undesirable
as organisations are non-profit
making and can ill afford an
unexpected tax bill. Contact us for
further assistance in this highly
complex and subjective area”.
Contact: Debbie Broadhurst or
David Miller on 0870 420 8971.
Back to top
Hot off the Court press is ‘official’
recognition of a VAT saving measure that we
have already implemented to help Health
Clubs (and for that matter any organisation
that has membership fees that attract VAT)
pay less VAT on fees paid monthly.
David says: “It is good that C&E have
recognised that there is a non-VATable
element to membership fees paid by
instalment and we advise any Club that
allows instalment payments to ensure they
put in place the necessary paperwork to
gain this benefit”.
For more information, contact
David Miller or call 0870
420 8971.
Back to top
|
Alcoholic Ingredients Relief |
A rather unusual but potentially lucrative relief that we find many affected businesses are not aware of – this is available for businesses that manufacture products that include alcohol, e.g. brandy butter, rum & raisin ice cream, rum toffee etc. This time of year is obviously the time when manufacturing of such items will be at a premium.
David says, “Although this may not seem an obvious benefit we have found that many businesses fail to claim this actual saving to bottom line profit.
For more information,
contact
David Miller or call 0870
420 8971.
Back to top
Do you import from non-EU
countries? Do you have stock on hand that
may not move for several months? Are these
duty and VAT paid?
If the answer is yes to these questions,
you may be able to significantly increase
cash flow by operating a Customs Warehouse.
David says: “Many businesses don’t realise
that they are entitled to use this
significant cash flow saving scheme and
although the scheme is controlled by HM
C&E, this is one area where they are
unusually co-operative when it comes to
allowing businesses to save money”.
For more information,
contact
David Miller or call 0870
420 8971.
Back to top
|
|
» C&E Adopt New Approach in Fight Against
‘Debenhams’ Scheme |
We featured Debenham’s’ High
Court win in our last Newsletter and it now seems
that HMC&E are not going to let this go. Not only
have they appealed the case to the Court of Appeal
but also they have adopted a new tack that is
designed to scare off retailers thinking of or who
are actually using the scheme.
David comments that “it seems clear that HMC&E are
determined to close this aggressive but legal
loophole and will use whatever means are at their
disposal to do so. Our advice is that any business
thinking of using this scheme should carefully
weigh up the pros of the potential actual savings
against the cons of C&E’s current tack and also
what would happen if they eventually win the
case”.
For more information, contact
David Miller or call 0870
420 8971. Back to top
|
|
This remains a source of debate and still seems to cause problems for businesses. It is ever more important to get this right, particularly as C&E have for some months now had a centralised unit that deals exclusively with Options to Tax and we have found that they are ever more vigilant in applying the law to the letter. Given that, this is largely procedural but can and often does cost a great deal of money if it goes wrong, our view is that it is better to take advice before its too late.
Ivan says, “We still find that many businesses fail to give VAT the proper consideration it needs and so are putting much money unnecessarily at stake. We believe in the 5 ‘P’’s principle and urge businesses to think VAT at the start of any property venture”.
For further information,
contact
Ivan Atkins or call 0870 420 8971.
Back to top
|
»
Mobile Phone / Computer Chip Dealers |
Whilst there has been much publicity on the missing £billions lost through missing trader fraud and Customs’ quite public stance on the legislation to combat it, we still receive on a fairly regular basis enquiries by businesses who seem determined to operate in these sectors.
Aside from the legal arguments as to the validity of the 2003 legislation on the questions of proportionality, infringement of Human Rights and the legality in EU law (questions that we understand will be addressed in the ECJ
hearings for Bond House Systems (to be heard in
December 2004) and the Federation of Technological
Industries (to be heard in 2005)), Customs have in
the meantime seem to have managed to put pay to a
large proportion of the trade in these sectors. In
fact, we have seen on numerous occasions that even
when Customs do not necessarily suspect a business
of involvement in a Missing Trader Fraud, it can
take months for the business to recover the VAT it
is owed back.
David advises: "whilst good
systems can assist in the eventual recovery of
VAT, a business should think very carefully before
engaging in either of the above industries since
there is a good chance that it will at some point
be entangled in the 2003 legislation, irrespective
of how good its systems are or innocent it
believes itself to be.
Given that delays at best can
mean months elapsing before recovery is
forthcoming and at worst recovery never occurring,
businesses need to consider whether they are
prepared to risk the substantial sums at stake for
what could be a high stakes gamble."
For more information, contact
David Miller or call 0870
420 8971. Back to top
|
»
VAT Stock Transfer Struck Out? |
South Liverpool Housing Trust has lost their appeal to recover VAT on repairs following its transfer of housing stock from Liverpool City Council. The properties had a negative capital value and the Council had paid a dowry to the Housing Trust, who claimed that this represented a taxable supply of relieving the Council of its responsibilities and that the VAT subsequently incurred on the cost of repairs was attributable to that supply.
However the Tribunal did not accept this view, holding that there was not a relevant supply between the parties supported by consideration and that the VAT incurred on the repairs was in fact attributable to the Trust’s exempt supplies of residential accommodation to its tenants and therefore non-recoverable.
Colin Mathieson states: “This is a disappointing but expected decision given the facts of the case however, transactions like this gave rise to the introduction of the current ‘VAT Shelter’ arrangements which now allows VAT to be recovered by Housing Associations on subsequent specific repair works. Unfortunately as the South Liverpool transfer pre-dates the current arrangements, it will not benefit from them, but anyone involved in similar housing transfers should seek advice to consider available planning."
For further information,
contact Colin Mathieson or call 0870 420
8971.
Back to top
Businesses who regularly have employees
working abroad in other European countries
are potentially losing thousands of pounds
in unclaimed VAT writes
Colin Mathieson.
“European VAT on Hotels, meals and miscellaneous expenses is going unclaimed as businesses are unaware or unable to follow established recovery procedures,” stated Colin, “There are special rates allowing VAT registered businesses within the EU
to recover VAT incurred on certain items to
be recovered. The normal deadline for
making such claims is the 30 June following
the calendar year the VAT is incurred. Many
businesses are missing this deadline," states
Colin "and therefore losing the opportunity
to claim this VAT back."
For further information, contact
Colin Mathieson or call 0870 420
8971. Back to top
|
|
