November 7, 2013

Tribunal – exempt tuition for sole practitioners and partnerships

On 11 October 2013 The Court of Appeal refused to allow a golf tutoring Appeal to go ahead on the basis that it would have no chance of success.

This case is very relevant to partnerships that currently provide exempt tuition. In fact it could mean that they will have to register for VAT purposes as soon as possible. It is our view that the trader should at the very least write to HMRC to enquire regarding the situation.

The case of Marcus Webb Golf Professional [2013] EWCA Civ 1225 found contrary to HMRC publications that as a partnership he should be VAT registered and his supplies by subject to VAT even though this was apparently contrary to the EU principle of fiscal neutrality, it was in accordance with the Principal VAT Directive.

Elysian Associates
November 2013

February 2, 2013

HMRC Changes Its Policy On Hotel Rooms Supplied For Catering Purposes

With effect from 22 January 2013 hotel businesses need to be aware that HMRC have changed their policy on the charging of VAT on rooms provided for the provision of catering facilities.

Revenue and Customs Brief 02/13 announces that HMRC now considers that the supply of hotel rooms is a standard rated supply even where the catering is provided by a third party.

HMRC had changed their interpretation of the law some time ago but has only now placed the change of policy into print.

Elysian Associates
January 2013

November 23, 2012

No VAT Registration Threshold For Non-UK Businesses Trading In The UK From 1st December 2012

Just a note to remind you that from 1st December 2012 following a recent European Court Judgment, non-established taxable persons (NETPs) will no longer be able to benefit from the UK VAT registration threshold (£ 77,000). They will be required to register for UK VAT when they make their first supply of goods and services here in the UK regardless of value.

NETPs who are already making supplies here will be required to register for UK VAT with effect from 1st December 2012.

I attach a link to Revenue and Customs Brief 31/12

Elysian Associates
November 2012

October 25, 2012

Recovery of Input Tax – ‘Right Tax Right Time’

HM Revenue and Customs recently issued an amended version of Notice 700 and have specifically noticed changes to the guidance on the timing of the recovery of input tax that came as somewhat of a surprise.

It say that if the VAT invoice is dated and available in the VAT accounting period covered by the tax point, it must be claimed in that period.

If that input tax cannot be claimed in the VAT accounting period covered by the tax point date, it should be claimed in the VAT accounting period in which the VAT invoice is received (which in theory must be the first one after the tax point date as a supplier must issue a VAT invoice within a month of the tax point and; any other input tax claim must be made by voluntary disclosure. This means that if you do not claim the input tax in the correct period then this is an error. See section 4 of Public Notice 700/45 How to correct VAT errors and make adjustments.

At one time HMRC didn’t seem to mind when input tax was recovered so long as it was not claimed early or more than 4 years after the tax point date.

This latest version of the Public Notice is closer to what the law requires but it is really not practical and we assume it is intended to make the calculation of penalties easier. However, do HMRC really want a voluntary disclosure with every VAT return submitted?

Elysian Associates
October 2012

June 7, 2012

Latest round of Compliance Task Forces announced by HMRC

HM Revenue and Customs have just announced the latest targets of its trade and region specific taskforce campaign.

In May 2011, HMRC said it would be setting up taskforces specifically to look at the affairs of specific trades in specific regions of the UK. First to be targeted was as usual the restaurant trade. Since then HMRC have investigated trades such as scrap metal dealers, fast food outlets and landlords across London and the South.

The new taskforces will be:

  • Indoor and outdoor markets in London
  • Taxi firms in Yorkshire and Nottingham
  • Property rentals in East Anglia, London, Yorkshire and the North East
  • Restaurants in the Midlands

Any errors found could lead to taxed based penalties or if more serious criminal prosecution. Clients who may have businesses in these sectors should come forward early to voluntarily disclose their errors as they will always be dealt with more favourably by HMRC.

We would advise any clients who may be worried to come forward as soon as possible to get matters dealt with before HMRC’s visit.

Elysian Associates
June 2012

May 1, 2012

Road Fuel Scale Charges (RFSC)

In Revenue & Customs Brief 11/12, HMRC has invited comments on a number of planned changes to the RFSC regime for accounting for VAT on fuel funded by businesses but used for private mileage.

The most significant change is acceptance by HMRC that, where a business has made charges for private mileage but these were below the RFSC rates; the business was only required to
account for VAT on the amounts charged, and not required to apply the RFSC.

Businesses which have done so are invited to submit claims for overpaid VAT. The other significant change will impact on partly exempt businesses applying the RFSC.

Elysian Associates
May 2012

March 28, 2012

The Budget March 2012

The Budget March 2012

The VAT rates remain unchanged at…

Lower rate: 0%
Reduced rate: 5%
Standard rate: 20%

The registration and deregistration limits from 1 April 2012 are…

Registration turnover: £77,000 (1 April 2011 – £73,000)
Deregistration turnover: £75,000 (1 April 2011 – £71,000)

Changes from 2013

The following changes to the VAT rules will be made in 2013…

- The standard rate of VAT will apply to the supply and installation of energy saving materials in non-residential buildings used for non-business purposes by charities. Currently the lower rate of VAT applies
- The invoicing rules will be simplified
- Exemptions will be introduced for commercial Universities
- Cable-car rides will attract the reduced rate of VAT, where each cable car holds fewer than 10 passengers.


The Government is consulting on the existing VAT law in the following areas, so expect changes in the future…

- Hot take-away food
- Sports nutrition drinks
- Self storage
- Hair-dressers’ chair-rental, and
- Alterations to listed buildings.

If there are any issues noted above that you would like to discuss at greater length please just give us a call.

Elysian Associates
March 2012

February 7, 2012

HMRC announce the new Contractual Disclosure Facility

Your sole proprietor and partnership clients might be interested in Customs announcement of the new CDF facility. The new facility became available on 31 January 2012 and all cases of suspected fraud will be treated under these new procedures.

Clients who make a disclosure under the new facility will still benefit from the Code of Practice 9 (COP9) protection from prosecution – provided they show continuous cooperation with HMRC and meet all the new stringent deadlines on time. COP9 has been rewritten for the new CDF procedure.

The new procedures

If your client is suspected of tax fraud, HMRC will send a letter offering the opportunity to disclose the omitted taxes under the CDF. Your client has 60 days in which to agree to the contract and outline their disclosure or deny the fraud. Denial, if proved to be incorrect, may be passed to HMRC’s Criminal Investigation team.

Your clients are advised to seek expert advice from yourselves before they approach HMRC.

The link below takes you to HMRC’s website and the 13 page COP9.

Elysian Associates
February 2012

June 28, 2011

Authenticated Receipts

Authenticated receipts, rather than VAT invoices, are often used in construction contracts. HMRC currently accept that the employer can recover the VAT as soon as it has paid the contractor, without waiting for the authenticated receipt.

The draft guidance indicates a change of policy, saying that the employer can only recover the VAT once it actually has the authenticated receipt. Any delay on the contractor’s part will therefore create a cashflow cost for the employer. Again, this will not be formally announced until later in the year, and it seems unlikely that HMRC will seek to apply it retrospectively.

This is an issue for anyone engaging a contractor for works that are subject to VAT, and using authenticated receipts. In negotiating contracts, you may wish either to consider the use of VAT invoices, where this problem does not arise, or to put a heavier onus on the contractor to issue authenticated receipts promptly.

Elysian Associates
July 2011

VAT and Construction Contracts

HMRC have released some revised guidance in draft, giving advance warning of some policy changes. In particular, these affect ‘design and build’ contracts and authenticated receipts.

Design and Build

HMRC have historically accepted that professional services supplied by a building contractor along with building work followed the same VAT liability as the work itself. This allowed a VAT saving on, for example, surveyors’ and architects’ services in connection with the construction of housing. Many organisations have established a ‘design and build’ subsidiary in order to take advantage of this.

HMRC have concluded that this arrangement is ineffective, and that the professional services remain standard-rated in these cases. Where relevant, this might be expected to increase construction costs by something like 2%.

This is unlikely to be a major concern for residential developers who will be selling the completed units, or granting long leases. It will be an issue for those granting short leases, notably RSLs. It is also a concern for student accommodation, nursing homes etc, and for some charities, although in these cases it may be possible to deal with the matter by restructuring transactions.

This change will not be formally announced for some months, and HMRC tell me that it will only apply from a forward date. In the meantime, several bodies are co-operating on lobbying over the change, and I am assisting on this, working for the universities. We are due to see both Counsel and HMRC Policy next week. It may well be that the most we can achieve will be some easing of transitional arrangements.

You may wish to let relevant clients know about this, particularly any which may have established ‘design and build’ subsidiaries. When acting for contractors, you may also wish to ensure that there is provision for the addition of VAT.

Elysian Associates
July 2011

Internet Marketing by 2buy1click Ltd