VATark

Holiday blog, September 2010

2010-09-23T21:25:00.001+01:00

15 September 2010

Here we are on the train to Brussels on the second stage of our journey to Hamburg for a week's holiday. Sadly there's a good chance our holiday is over when you are reading this as connecting to the Internet will be kept to a minimum.

Why is this the second stage of the journey? Because the first stage was the trip from home to St Pancras International to catch the Eurostar train. We left home at six o'clock and left behind a puzzled cat, Pooh, who will no doubt spend the day in the garden looking huffy and waiting for another cat to pick a fight with. That or he'll catch an innocent bird to vent his frustration. And for an eighteen year old cat that's some feat! I'd love to include a photo of him in this blog but most of the pictures of him shoe no detail as he's black, so no much detail shows up in the photo.

And now we're on stage three of our trip today: from Brussels to Köln. As I write this we've just left Liege. Next stop Aachen. The weather's brilliant, but that's easy to say sitting on an air-conditioned train! This is just the sort of weather we want for our holiday: dry, bright and preferably not very windy.

Whilst we were waiting at Brussels we listened to the announcer who had to repeat most announcements three times in three different languages. The speed with which she did this left her sounding as though she was out of breath. I wonder: was she on a bonus for finishing all the announcements in record time?

We noticed at Brussels that not all trains on the Continent run to time. The departure board showed at least one train that was 45 minutes late and the train to Paris was gradually getting later and later. Fortunately the train to Cologne was running to time!

We've left Aachen. The next stop is Köln where we change trains again for the final leg to Hamburg.

So, here we are in Köln waiting for the last train on our journey today. Having a little time in hand we had a bite to eat at a ... Pizza Hut!

Now back to my earlier comments about the smooth running of trains on the Continent: it's a myth! As we were approaching Köln there was an announcement that our train, which was supposed to go on to Frankfurt was terminating at Köln, and would be returning to Brussels. No reason was given. The train was apparently working fine. There must have been a reason that the controllers decided to take the action they did. Who cares? It hasn't affected our journey! (Does that seem a little callous? Sorry, that's how I'm feeling just now :-) )

Arrived in Hamburg at around 19:30 and found the hotel very easily. It is only about 150 metres from the station! To get to our room was the usual long trek through a rabbit warren of corridors, and as far away from the lift as possible. This seems to be usual for our stays in hotels. In this case it was worth it as there were quite good views out over the city.

16 September 2010

First real day of the holiday. Breakfast in the hotel was great! A really good selection of hot and cold foods. We ate well.

Next thing on our list was a walk into the city before meeting up with Claus and Christina at around 12:00. We visited a couple of shops to have a look at shirts - I hadn't taken enough, deliberately. Unfortunately all the great colours were in the slim fit style which I think is not a good choice for me. I'll leave you to draw your own conclusions.

Met up with Claus and Christina and went off to see the 'Miniatur Wunderland' with a whole series of model scenes of various places. See the photos for some idea of what was on display. It certainly seemed to attract a lot of visitors. It was fascinating to see the attention to detail that the model makers had put into the displays, although there seemed to be a morbid fascination with car crashes and fires!

After spending quite a while looking at the models we went for a walk around part of the newly modernised area of the port where the warehouses have been converted into apartments and offices or new buildings have been built to replace those that could not bee reused. We eventually made our way into the city centre and found a place to have a belated lunch before heading for 'home'.

The weather has been kind to us today, albeit rather windy. The forecast for the next few days appears to be more of the same: sunshine and showers. Here's hoping that it will be more sunshine than showers!

17 September 2010

Today, it rained -- but not for long!

We went to the Welt Vogelpark, Wolsbade. An incredible place with many birds from around the world of which I hadn't heard. We spent several hours looking around. A place worth visiting with extensive grounds and a lot of well looked after birds on display.

18 September 2010

Not such an action packed day as the weather was against us. We went out to do some shopping, returned home for lunch and had intended to go out for a walk. The fast approaching black clouds put us off. It seemed better to stay in and keep dry!

19 September 2010

Christopher, Eva and Theo came for a Brunch today. Theo has grown and has found his voice - what a chatterbox he is! He soon lost his shyness and was happily playing with his toys soon after Brunch was over. The rest of us sat and chatted for the rest of their visit. All too soon we were waving them off.

As the weather was better than expected we went to a Flohmarkt and later for a walk around a nearby lake. As it was rather a large lake we only walked part way round and retraced our steps. We had some tea when we got home.

Karen and Christina went out to the DVD rental shop in the village and came back with a film for us to watch this evening.

20 September 2010

The wettest day of our holiday so far. We spent most of the day pottering around Hamburg. In the evening we met up with Caroline and had a meal at a local Tapas bar. We enjoyed the evening, even if it was raining when we left that we got rather wet on the way back to the car park.

21 September 2010

The last day of our holiday and the weather is wonderful. We went to Friederichstadt. A pretty little town near the North Sea coast. The streets in the town centre are cobbled. There are canals around the town which appears to be on low lying land, so probably liable to flood. Boat trips on the canal had been cancelled because of the high water level.

After lunch we went to Husum, a small port a few kilometres away from Friedrichstadt. This was pretty with a harbour almost in the town centre. We walked around the town centre through narrow lanes and returned to the waterside where we had left the car.

The sun shone most of the time today, making it possibly the best day of our holiday.

We return home tomorrow. :-(

22 September 2010

We're on our way home :-( We've had a lovely week away from work and are again testing the German trains as we travel back to the UK. We're on the first leg from Hamburg to Köln. The train was a little late leaving Hamburg, but we have plenty of time to make our connections. We'll be home about 20:30 this evening.

Fun and games! We arrived at Dortmund on time, and about the time we were supposed to leave it was announced that the train was being diverted. Lots of passengers travelling to the stations we will no longer be stopping at were jumping up, grabbing their bags, and getting off the train to get connecting services to their stations. We're now travelling along the route that we travelled on the way to Hamburg.

Well, we got to Köln a little later than scheduled but with plenty of time to get a drink and food without any visible signs of panic! Got on the train and found our seats. Seems most of the passengers in this carriage are English. This does not apply to the little man from North America who was upset, and proclaimed it loudly, at being turfed out of his seat as someone else had the reservation for it.

Next stop Bruxel.

We're feeling right at home on the Continental trains. We arrived in Bruxelles ten minutes late - just like a train at home! We're now sitting on the Eurostar waiting to depart at just before 18:00 local time. Time to put our watches to BST.

An easy journey from Brussels, arriving on time at St Pancras. After the long walk through to Customs, and out to the station concourse, there was just enough time to get a newspaper, buy our tickets and get to the platform with just enough time to get on the train. Home just after 8:30pm and a warm welcome from the cat!

Thank yous

First, thank you to Claus & Christina for hosting our stay and making sure we had a fantastic time.

Second, thank you to Steve Ody at Citrus Travel for organising the travel and hotel stay for us, and making it all work like clockwork.

Finally, thank you for reading, if you have been :-)

See the full gallery on posterous

Posted via email from Karen & Robert Killington

Registration Limits for UK VAT from 1 April 2010

2010-08-07T21:34:00.001+01:00

The VAT registration limits changed on 1 April 2010. If you want to know what the VAT registration limits are in the UK you can find them on my blog.

Posted via email from VATark: The Fun VAT Man

Sponsorship - can it be zero-rated as charity advertising?

2010-03-07T16:16:00.001Z

I had a 'phone call recently from a charitable organisation that was intending to give another charitable body a grant with which to buy vehicles. The intention of the grant giving organisation was to require the recipient to put certain logos on the vehicles to indicate that they had been funded by the organisations providing the money. By putting this requirement into the contract with the recipient organisation there seemed to be a danger that this could make the transaction liable to VAT. That VAT would have to be charged by the recipient but would be unrecoverable by the giver - so either the recipient lost out by about 15% or the donor had to find another 17.5% to fund the VAT. Neither answer was particularly good.

In this instance the advice given was simply to remove the clause that imposed an obligation on the recipient to do anything in return for the grant. Most recipients would be happy to make it clear who had provided the funds for the purchase of the goods, in this case vehicles, without it being obliged to do so.

One of the potential recipients of the grant then contacted me to discuss whether the grant would, if the obligation to put the logos on the vehicles was retained, be zero-rated as paying for the supply of advertising to a charity.

Criteria for zero-rating

There are a number of criteria that have to be met for charity advertising to be zero-rated. H M Revenue & Customs (HMRC) set out these criteria in the VAT Notice 700/58. In summary, the criteria are:

The advertisement has to appear in a medium that is available to the 'public'
The advertisement has to occupy someone else's space or time, i.e. the advert cannot be on the charity's own web site, magazine, etc.

Advertisements can appear on any medium from billboards to newspapers, beer mats to sides of vehicles, and will qualify for zero-rating provided the space or time used belongs to someone other than the charity, i.e. the charity has to pay for the space or time being used for the advertising.

Those are the criteria for advertising on its own, not part of what is more often referred to as sponsorship.

What is sponsorship?

Good question, I'm glad you asked...

Sponsorship is when one person agrees to support another either by giving goods, services and/or money. If the sponsor obliges the recipient to do something in return, e.g. name an event after the sponsor, or show the sponsor's logo on event materials, there is a supply of services by the recipient to the sponsor. This supply is generally a taxable supply, liable to VAT at the standard rate (17.5%) for supplies within the UK. A different VAT treatment might apply if the supply is to a charity outside the UK.

Whether sponsorship can be a single supply of advertising will depend on the terms of the agreement between the parties involved. If the agreement, for example, only requires that the sponsor's logo appears prominently on relevant event notices, leaflets, advertising, etc. then there is possibly just a single supply of advertising.

So, can advertising by a charity be zero-rated as part of a sponsorship deal?

Possibly. It depends on the facts of the situation. HMRC might argue that just using a logo in this case was insufficient for it to be clear who was doing the advertising. Whilst it would be possible to successfully challenge HMRC's argument the costs involved might make that action commercially unsound.

In this case I thought it was too risky for the donor organisation to have a clause obliging the recipients to put the logos on the vehicles. The risk was that the recipient might have to charge VAT at the standard rate and that would mean either the donor had to find the extra money or the recipient in effect had less to spend.

The best thing to do? Seek professional advice. Give the adviser the full facts. Yes. All of them; leave nothing out. That will protect you from penalties for not taking reasonable care.

Got a view on this? I'd love to hear your views - leave a comment.

Posted via email from VATark: The Fun VAT Man

Paying VAT by cheque? You'll need to get the cheque in much earlier...

2010-02-26T12:43:00.001Z

HMRC has announced that from 1 April 2010 it will be treating payments made by cheque for VAT as received on the date cleared funds reach its bank account.

This is a significant change and one of which businesses need to take account. From 1 April 2010 if you send in your VAT return and payment to arrive by the due date the payment will be late because it will clear on a date after receipt. This will leave your business liable to a late payment penalty. Currently late payment surcharges are on a sliding scale from 2% to 15% - be late paying at your peril.

After 1 April 2010 you will need to make sure you send your payment to HMRC so that they have sufficient time to present the cheque and for the funds to clear by the due date. This is effectively reducing the time available for preparing and submitting VAT returns and payments by as much as seven days.

Submit and pay electronically

You can avoid this difficulty by moving to submitting your returns online, which will require you to pay your VAT electronically. If you choose to pay by direct debit, not only do you get an addition seven days to submit your VAT return you also get a further three days before HMRC take the money from your bank account.

Comment

This change by HMRC is probably to help cash flow and generate additional revenue from increased penalties. HMRC still require businesses using the, for example, Cash Accounting Scheme or the cash basis of the Flat Rate Scheme for Small Businesses to account for VAT on cheques on the day they are received.

This appears to be yet another attempt by HMRC to put more businesses into the penalty régime by moving the goal posts, whilst requiring the businesses to account for VAT on a less beneficial, for the business, way.

What are your views? I'd love to read your thoughts on this - please leave a comment.

Posted via email from VATark: The Fun VAT Man

Time limits for keeping VAT records

2010-02-23T10:36:00.001Z

A little while ago I put out a note about new time limits that HMRC have introduced for how far back it and taxpayers can go when correcting errors, and highlighted the good and the bad points. You can find the post on my website.

After that post, I was asked if that meant that the time limits for keeping records had been reduced from six years. I was unable to answer that question then, but HMRC has again come to my rescue by issuing some guidance on how long papers need to be kept. The bad news is that nothing in their guidance has really changed.

You can download the HMRC guidance from its website. For more specific guidance on VAT you can find it on HMRC's website here.

What do you think? Given that for direct tax the time limits have been reduced, and for VAT they've been increased, should the time one has to keep records for be brought into line with the new rules?

Posted via email from VATark: The Fun VAT Man

Snow in Crawley

2010-01-08T08:57:00.001Z

Some photos I took on Wednesday while I was out walking in the snow.

See the full gallery on posterous

Posted via email from Karen & Robert Killington

VAT Fuel Scale Charge - what to do after 1 January 2010

2010-01-05T15:15:00.001Z

After yesterday's post about the Flat Rate Scheme for small business rates that apply from 1 January 2010 I thought I'd remind you about the change to the Fuel Scale Charge. I've prepared a table showing the new amounts to apply now that the VAT rate has increased to 17.5%.

If you apply the Fuel Scale Charge for private motoring you need to remember to apply the correct rate for months after 31 December 2009. If your VAT period spans the change in rate, those months that come after the change will need to pro-rate your fuel scale charge for that VAT period.

Posted via email from VATark: The Fun VAT Man

VAT: The Flat Rate Scheme - new rates from 1 January 2010

2010-01-04T13:49:00.001Z

With the change in rate of VAT on 1 January 2010 the rates to be applied by those using the Flat Rate Scheme have changed, again! For information on how to apply the changes visit HMRC's website.

The following table shows the percentage that businesses in the Flat Rate Scheme should use from 1 January 2010 in preparing their VAT returns.

Category of business	Appropriate percentage
Accountancy or book-keeping	13
Advertising	10
Agricultural services	10
Any other activity not listed elsewhere	10.5
Architect, civil and structural engineer or surveyor	13
Boarding or care of animals	10.5
Business services that are not listed elsewhere	10.5
Catering services including restaurants and takeaways	11
Computer and IT consultancy or data processing	13
Computer repair services	9.5
Dealing in waste or scrap	9.5
Entertainment or journalism	11
Estate agency or property management services	10.5
Farming or agriculture that is not listed elsewhere	6
Film, radio, television or video production	11.5
Financial services	12
Forestry or fishing	9.5
General building or construction services*	8.5
Hairdressing or other beauty treatment services	11.5
Hiring or renting goods	8.5
Hotel or accommodation	9.5
Investigation or security	10.5
Labour-only building or construction services*	13
Laundry or dry-cleaning services	10.5
Lawyer or legal services	13
Library, archive, museum or other cultural activity	8.5
Management consultancy	12.5
Manufacturing fabricated metal products	9.5
Manufacturing food	8
Manufacturing that is not listed elsewhere	8.5
Manufacturing yarn, textiles or clothing	8
Membership organisation	7
Mining or quarrying	9
Packaging	8
Photography	10
Post offices	4.5
Printing	7.5
Publishing	10
Pubs	6
Real estate activity not listed elsewhere	12.5
Repairing personal or household goods	9
Repairing vehicles	7.5
Retailing food, confectionary, tobacco, newspapers or children’s clothing	3.5
Retailing pharmaceuticals, medical goods, cosmetics or toiletries	7
Retailing that is not listed elsewhere	6.5
Retailing vehicles or fuel	6
Secretarial services	11.5
Social work	10
Sport or recreation	7.5
Transport or storage, including couriers, freight, removals and taxis	9
Travel agency	9.5
Veterinary medicine	10
Wholesaling agricultural products	7
Wholesaling food	6.5
Wholesaling that is not listed elsewhere	7.5

(1) * “Labour-only building or construction services” means building or construction services where the value of materials supplied is less than 10 per cent of relevant turnover from such services; any other building or construction services are “general building or construction services”.

Posted via web from VATark: The Fun VAT Man

Want to know how much VAT you're paying? Here's how to work it out

2009-11-14T15:33:00.001Z

If you run a VAT registered business you will get bills that show a VAT inclusive price. You need to know how much VAT is in that price so you can reclaim it on your next VAT return. Here's how you do it:

Let's work with a nice round figure: £100.

The current VAT rate (November 2010) is 15%. So you multiply £100 by 15 and divide it by 115... Eek! big numbers. It's easier, you multiply it by 3 and divide by 23.

100 x 3 = 300

300 ÷ 23 = 13.0434

The VAT in £100 is £13.04.

The VAT rate goes up on 1 January 2010, so here's how it works from then. Same method just different numbers:

100 x 7 = 700

700 ÷ 47 = 14.8936

The VAT in £100 is £14.89 when the VAT rate is 17.5%

Posted via email from VATark: The Fun VAT Man

Spider outside the kitchen window

2009-10-04T19:50:00.001+01:00

Posted via web from The Killingtons

Technorati code - not worth reading unless you are Technorati

2009-09-21T22:45:00.001+01:00

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Posted via email from VATark: The Fun VAT Man

Tweetie goes to Leeds Castle

2009-09-21T18:18:00.001+01:00

Audio File attached
Mon Sep 21 18:15:09 BST 2009

(1287 KB)
Listen on posterous

Posted via email from M0VPG

VATark

2009-08-23T21:18:00.001+01:00

Posted via web from VATark's posterous

Buying VAT free from abroad...

2009-08-17T17:53:00.001+01:00

I had a letter from Royal Mail the other day asking me to pay VAT on a parcel I had ordered from the USA. The parcel arrived today, after I'd paid the VAT and Royal Mail's handling fee.

So what?

Well I've bought quite a few things from the USA and not been asked to pay VAT, so it's a bit of a lottery.

BUT...

If you are buying low value items, up to £18 including delivery, you can get these imported free of VAT. HMRC have been concerned that UK businesses are misusing this relief by sending goods, such as CDs and DVDs, out to the Channel Islands and claiming that they are selling them there to UK customers. Provided the items are within the £18 limit they don't account for UK VAT on them. They'll even split an order into smaller packs to take advantage of the relief from VAT.

It appears, according to an article on the Guardian website, (http://www.guardian.co.uk/business/2009/aug/16/tax-avoidance-channel-islands) that HMRC are now looking at how they can beat this loss to the Revenue by saying that the use by UK businesses of this system is abusive. I can see how HMRC would consider that they had a case to bring against some of the UK retailers. That's not what I wanted to say though. If you are interested in that aspect I suggest you read the Guardian article.

What did I want to say?

Oh, yes...

If you are looking for CDs, DVDs, SD cards, Compact Flash cards, etc. that are relatively cheap, you might find you can save money by buying from a business outside the EU. The important thing to remember is that the real limit is £18 but that HMRC don't always spot those that are over the limit, so you can get a real bargain. On the other hand, if your purchase only just exceeds the limit and you have to pay VAT, you'll also pay Royal Mail or Parcel Force a clearance fee that might make the whole exercise too expensive.

So, the lesson to take from this article?

Be aware of the limit.

Expect to pay VAT if your order is over the limit.

If you don't get asked to pay VAT, that's a bit of good fortune but not something you can expect to happen every time.

If you've been lucky, let me know in the comments below. If you haven't, have a moan in the comments - get it off your chest!

I'm looking forward to reading your comments.

If you have been, thank you for reading this far.

Posted via email from vatark's posterous

Can I claim back VAT on car parking charges?

2009-08-16T18:43:00.001+01:00

I was asked this recently and like a good VAT adviser answered with a non-commital: it depends.

The client explained that they had several employees who travelled to meetings and incurred costs of parking. Sometimes the vouchers the employee got when parking showed a VAT number and sometimes it didn't. This was confusing and they wondered whether they could just write the VAT number on the vouchers they had which didn't have a VAT number on.

No! That way lies problems.

Let me explain. Car parking falls into two categories:

1. On-street parking; and

2. Off-street parking.

On-street parking is operated by the Local Authority and is covered by statute. Because of this there is no VAT on on-street parking charges.

Off-street parking is probably liable to VAT. It depends on whether the organisation operating the car park is VAT registered. You will know this because the car park vouchers will show a VAT number, or you can get a VAT receipt for the parking charge from the attendant. It's harder to get a VAT invoice from an attendant as more and more car parks rely on machines to deal with the money and tickets.

So the answer: it depends!

If the voucher has a VAT number on it you can claim back the VAT.

What if you've overstayed your welcome and incurred a penalty in an off-street car park?

This is harder to answer, but in most cases there will be no VAT on the penalty as it is compensation for loss of use of the parking space. Most car parks will operate on this basis. However, to be really sure of the right answer you'd have to get a copy of the terms and conditions of the car park...

Yeah! Right! who's going to do that...

If you're really lucky you can take a photo of the car park's basic terms that might be on display near the entrance and read that when you have quiet five minutes. No? Well it was just a suggestion since most of us have a camera in our mobile phone. It's probably safer to just accept that you don't recover the VAT on parking penalties.

As most parking vouchers don't show the VAT separately do you know how to work it out? I'll post an article on how to do this soon.

If you've read this far, thank you. Please leave a comment or ask a question below.

Posted via email from vatark's posterous

VAT registration woes..

2009-08-12T16:45:00.001+01:00

Oh! Good grief! Is that really the standard of response people get from HMRC's VAT registration unit in Wolverhampton??

Let me explain. I've just been reviewing a copy of a letter that an accountant client received from HMRC. He had submitted an application to register for VAT on behalf of his client because they'd acquired a property as a transfer as a going concern.

Eh? I hear being muttered. The entity applying for the VAT registration had acquired a commercial property with a sitting tenant from another entity that had opted to tax the property, i.e. charge VAT on the rent.

So the accountant had sent in an authorisation for HMRC to talk to him and HMRC's note says, in essence, before we can talk to the agent (the accountant) they have to submit a form, and it has to be the latest edition of the form. And as we haven't received the form we aren't sending this to your accountant. Err? Who sent me the copy? Oh! yeah! that's right the accountant to whom HMRC haven't sent a copy. Confused? You'll be more confused as this story unfolds.

In addition to this they enclosed a 'property questionnaire' which has left me almost speechless. The questionnaire appears to have been put together randomly from parts that are provided as boiler plate text in a template without any thought for the information already held! At least two of the questions cannot be answered because they either don't apply or none of the options applies to the situation. This is worrying because at the top of the form it says: "Any missing or incomplete information/evidence will delay your application."

One question asks questions that can only apply to non-commercial property and given the applicant has already told them this is commercial property...

Another asks for information that was provided on the application form! {Shakes head in wonder at the lack of forethought of the person compiling the form}

See the picture of the questionnaire if you need convincing!

I can almost hear you cry: Enough! Enough! And I haven't even posted this yet!

If you have any examples of similar correspondence from HMRC and want to vent your frustration, please comment below. I'll consider using any tales of woe I receive in a paper to HMRC, so I'm looking forward to reading them.

If you have been, thank you for reading!

Posted via email from vatark's posterous

I've paid the assessment so why does my accountant say I have to pay more money to HMRC?

2009-08-10T08:00:00.001+01:00

I was asked this question by a client recently who had had a visit from the VAT office to check their VAT accounts. In doing this the VAT inspector had noticed that my client had not been charging VAT on some sales they'd made. After investigating the reasons the VAT inspector decided that VAT should have been charged and calculated how much VAT my client had to pay.

How did the VAT inspector do this? Well, let's suppose for the moment that my client had issued an invoice for £100. The VAT inspector would want to work out how much of that was VAT - he was treating the invoiced amount as VAT inclusive - by applying the VAT fraction to it. He would get the answer £13.04 (for 15% rate of VAT) and raise an assessment on that basis.

Client paid the assessment and issued invoices to its customers adding VAT to the invoice, i.e. asking the customers to pay £15. Because HMRC's assessment was for £13.04 this meant that my client still owed them £1.96.

So what's the worry, it's less than £2.00? Well the worry is that the final figure for my client was in tens of thousands. I only used £100 as it's easy to show the way things work with small round sums.

Do you see what's happened? Do you understand why there's extra VAT to pay?

You do? Okay skip the next bit and add your comment at the end of the article.

If you don't, read on:

The VAT inspector treated the invoiced amount as VAT inclusive. My client treated it as VAT exclusive. My client collected an extra £15 per £100 from their customers so had to account for VAT out of that because they'd received extra 'consideration' for the goods they'd supplied.

Consideration just means payment - but allows for payment to be in any form, including part exchange or barter.

The accountant had explained this to my client already, but the client apparently preferred to hear it from me. Maybe it's the way I tell 'em?

Thank you for reading this far. Please leave a comment on this article.

Posted via email from vatark's posterous

Doing VAT returns online...

2009-08-08T20:58:00.001+01:00

Have you heard? HMRC are going to make it compulsory for businesses to submit VAT returns online. At the moment the full rules haven't been finalised but the current proposal is that this will apply to all businesses with a turnover of £100,000 and more and new VAT registrations from 1 April 2010.

Would this bother you? Are you concerned about the security of the system?

I know HMRC is concerned about security too and is working hard to make sure that the security issue is dealt with.

I also know that HMRC are also aware that some may think that this will change the whole way in which they do VAT. The only thing it is going to change is the way in which you submit your VAT return - you'll fill it in online, press the submit button, get a confirmation that the return has been received and that's it! Done!

For many businesses this will be an easy change to make - although there may be some reticence about making the move. I've been doing my returns online for some time. Alright, so I'm a VAT specialist and a bit of a geek and it might appear that I find these things really easy - I don't: it took me some time before i did my Tax Return online, rather than sending in a paper return. I understand that some of you will find it difficult to make the move. Think about it this way, all you are changing is the way you complete your VAT return. Instead of filling in nine boxes on a piece of paper you fill in nine boxes on the computer screen. You can print of the return you submit this way so you have a hard copy - I do and recommend that anyone doing their VAT return this way does too.

A couple of other things to bear in mind: you get an extra seven days to submit your return, and if you pay by direct debit your payment won't be taken until

12 days or so after the real due date (i.e. the end of the month after the end of the VAT period) from your bank account.

As many of you will have to do your VAT returns online anyway, I encourage you to do it sooner rather than later. You can find all the details on how to do it on HMRC's website.

Your views, comments and questions are always welcome - use the comment section below.

Posted via email from vatark's posterous

A quandry...

2009-08-08T15:04:00.001+01:00

I'm a VAT Consultant.

What do I sell?

VAT Advice?

Health checks?

Reports?

Or something even more intangible?

One thing I don't sell is VAT!

I was at a client's recently and in a break in the meeting we discussed what it was that I provided. Certainly my knowledge of and understanding of the VAT system helped, but the benefit my client got was?

Peace of mind?

A feeling of relief?

A lifting of a weight from their shoulders?

Whatever it is everyone wants some (I hope) but I can't bottle it or parcel it up in any way which makes it hard to sell.

Do you want some?

Knowing that you've done your best to get it right?

Is it that sense of relief that you get when you've finally done that job that's been hanging around for ages? You know, the one that you put off because you thought it would take ages, but when you buckled down to it only took a few minutes? I know that feeling, happens to most VAT registered business owners, including me, every three months as they do their VAT return. And for the self-employed once a year when you do your tax return.

Did any of this make sense? Want to make a comment? I'd love to hear your views.

If you've read this far, thank you for reading.

Posted via email from vatark's posterous

Fuel Scale Charge

2007-06-12T17:34:00.000+01:00

Just a quick reminder that although the new fuel scale charges came into force on 1 May 2007 they only apply to VAT periods beginning after 30 April 2007. This means that the first time they are used will be by businesses that have VAT periods ending on 31 July 2007.

VAT Registration limits

2007-05-24T21:44:00.000+01:00

I don't suppose it's ever too late to remind you about the VAT registration limits. They changed in the Budget this year, as usual, but the increase was rather more than I had expected.

From 1 April 2007 the registration limit was increased from £61,000 to £64,000.

At the same time the de-registration limit was increased to £62,000 from £59,000.

This is all good news for the small business as it means they can stay outside the VAT club for a while longer. Or they can escape from it if they are already in it. Need more information on how this works?

When to register for VAT

You have to register for VAT when the value of your 'taxable supplies':

in the last 12 months; or
in the next thirty days

exceeds the current limit.

In the case of the last 12 months, its easy to see how to calculate it. You just go back 12 months. It's May now, so we'd work to the 12 months ended April 2007 and start at May 2006.

It may not be so easy to see for the 'look ahead' thirty days rule. In this case, you ignore past turnover, and just consider what you are going to do in the next thirty days. If you know today that you are going to issue an invoice, or invoices, for more than £64,000 in the next thirty days, you have to register for VAT. At least you have to notify HMRC of what has happened. I'll explain about exemption from registration another time.

'Taxable supplies' are those supplies on which you'd have to charge VAT if you were VAT registered. This includes items that are zero-rated, at the reduced rate (5%) and the standard rate (17.5%).

Cancelling your registration

Just to add a bit of confusion these limits are exclusive of VAT.

If you can show that the ex-VAT value of taxable supplies in the coming 12 months is not expected to be more than the limit, you can cancel your registration.

You should also cancel your registration if you stop making taxable supplies - except for a temporary suspension.

Do you deal in computer chips or mobile phones?

2007-05-22T18:37:00.000+01:00

You do? Then you need to read HMRC's latest information sheet - 8/07. You can get a copy from the HMRC website (click here to download a copy).

The new rules come into effect on 1 June 2007. They apply to supplies of mobile phones and/or computer chips that are:

valued at £5,000 and above; and
made by one VAT registered business to another.

Under these rules it is the customer's responsibility to account to HMRC for the VAT on these supplies.

Mobile Phones
The reverse charge does not apply to the following:

phones supplied with a contract for air time;
phone accessories supplied separately;
walkie talkies;
WiFi phones unless they are also intended to work with mobile phone networks; and
3G data cards and WiFi cards.

Computer chips
The reverse charge only applies to computer chips that are supplied separately and have not been incorporated in equipment, e.g. on a motherboard. Computer chips affected by the reverse charge rules are:

small integrated circuits (CPUs);
discrete integrated circuits, e.g. Microprocessors and Microcontroller; and
Chipsets – dedicated cluster of integrated circuits that support MCUs.

When to apply the rules
You only apply the rules when you sell to another VAT registered business and the VAT exclusive value of the sale is more than £4,999.99. This limit is a per invoice limit. Offering discounts can affect whether the reverse charge applies.

There are a number of suggested checks that need to be carried out to meet the requirements of HMRC set out in the Information Sheet. These appear to be reasonable requirements, and probably ones you undertake almost automatically when taking on a new customer. You should now make them compulsory checks to avoid falling foul of HMRC's rules or you may have to pay the output tax on the transaction.

Invoicing
When invoicing reverse charge items it will be necessary to clearly set out on the invoice the amount of VAT that the customer has to account for to HMRC.

And just to add to the paper work, for each VAT period you'll also have to prepare a Reverse Charge Sales List (RCSL). This will list the VAT number of the customer and the amount of reverse charge goods sold to them each month.

Notification
HMRC require businesses to notify them within thirty days of their first sale that will come under the reverse charge rules. You'll be asked to provide contact details.

If you stop making supplies affected by the new reverse charge rules, you'll have to notify HMRC of this. If you start making the supplies again, see previous paragraph!

Conclusion
This is not a straightforward situation. The comments made above are only scratching the surface of the requirements of the new rules. You should either read the Information Sheet or seek profressional advice.

What? No VAT invoice?

2007-05-15T08:44:00.000+01:00

A little while ago HMRC issued a revised Statement of Practice (SoP) on when they'd allow a business to recover VAT without a valid VAT invoice. The stated aim of the SoP is to explain and clarify HMRC's policy "in respect of claims for input tax supported by invalid VAT invoices."

Every VAT registered business has a right to deduct input tax, provided certain conditions are met. The first and probably most important evidence is a valid VAT invoice. In the absence of a valid VAT invoice HMRC are permitted to accept alternative evidence, not just documentary evidence, to support input tax recovery. Before April 2003 they were allowed to accept alternative documentary evidence.

Part of the rationale behind the changes made in 2003, and which are much more evident today, is the potential for fraudulent issue of invoices when no supply has taken place. Particular rules apply to certain types of goods:

• computers and any other equipment, including parts, accessories and software, made or adapted for use in connection with computers or computer systems.
• Telephones and any other equipment, including parts and accessories, made or adapted for use in connection with telephones or telecommunications.
• Alcohol - those alcoholic liquors liable to excise duty.
• Oils - all oils that are held out for sale as road fuel.

For goods in the above list HMRC may make ask for additional evidence before permitting a business to recover input tax. In other cases provided the business can answer questions about the supply received and provide alternative evidence HMRC will generally allow the claim.

In the SoP HMRC set out in the appendices information that can help a business determine whether it can recover the input tax. One thing that isn't mentioned is whether HMRC will advise on whether a business can recover input tax when it doesn't have a valid VAT invoice and is unable to get one. The simple answer seems to be: no, they won't. It's up to the business to decide whether it can recover the input tax and using the guidance in the SoP can help.

One thing that is of concern is the last paragraph of the SoP which states:

"If HMRC refuse to allow deduction of input under this SoP, unsuccessful claimants can first ask for reconsideration of the decision. Should that be unsuccessful, they will then be able to appeal against HMRC's decision to the VAT & Duties Tribunal."

This suggests that a business has to ask for a reconsideration before it appeals against a decision. In reality, there is nothing to stop a business from lodging an appeal without seeking a departmental reconsideration.

You can get a copy of the SoP from HMRC by clicking on this link.

Weald Leasing - Revenue & Customs Brief 39/07

2007-05-14T16:26:00.000+01:00

HMRC recently issued a Revenue & Customs Brief saying that the decision of the VAT Tribunal had “excited the interest of VAT Practitioners.” This excited interest has led HMRC to issue the Brief and indicate that the Tribunal decision is being appealed to the High Court. The basis for this is that HMRC consider that the Tribunal didn’t follow the decision of the ECJ in the Halifax case.

In the Weald case, which involved a number of members of the same trading group, and an independent company, the aim had been to gain tax flow advantages, and address issues that affect only the insurance industry. Weald was not a member of the VAT group to which the other parties, apart from the independent company, belonged. Weald bought assets that it leased to the independent company which in turn leased the assets to the VAT group. The aim of this was to circumvent a requirement in the VAT Act 1994 that would have required VAT to be accounted for on the open market value of the supply because the supplier and recipient were connected and the recipient was not entitled to recover all the VAT on its supplies.

Whilst the Weald case did not match the Halifax case in its entirety HMRC considered that it had been abusive practice, intended to avoid paying or to defer the payment of VAT. The Tribunal, however, did not agree. Having reviewed the decision of the Tribunal and the comments in the ECJ’s decision in Halifax it is difficult to see how an appeal against the decision can be won by HMRC. Having said that don’t be too surprised if the decision is overturned, and the issue rumbles on for some time.

Whatever the outcome, further clarification of how the abusive practice doctrine should be applied in the UK is to be welcomed.

MTIC fraud - further setback for H M Revenue & Customs

2006-11-29T08:32:00.000Z

It is being reported this morning, 29 November 2006, that Britain has suffered another setback in attempting to get agreement at the ECOFIN meeting yesterday for its proposed new rules to combat MTIC fraud. The items is reported to have been removed at the last minute because the objections of France, who introduced a similar measure earlier this year, could not be overcome. This is going to have to wait until the meeting in January 2007 before Britain gets an indication of whether it can implement the procedures to combat the fraud.

H M Revenue & Customs issued a business brief earlier in November, after the first setback, indicating that they will give businesses and fraudsters eight weeks notice of the implementation of the new rules.

Customs want to have their cake, and eat it

2006-08-24T22:21:00.000+01:00

Her Majesty’s Revenue & Customs have issued business brief 13/06 setting out their views on the outcome of the Fleming and Condé Nast cases so far. Fleming is being appealed to the House of Lords, and Her Majesty’s Revenue & Customs have petitioned for permission to appeal Condé Nast there too. In Condé Nast Her Majesty’s Revenue & Customs have decided that the three-year cap...

“... should not be disapplied generally in respect of all claims arising before the capping legislation as was decided by the Court of Appeal. Consequently, HMRC argue that, if a taxpayer would not have put in a claim even had a transitional period been provided when the cap was introduced, the absence of a transitional period cannot be said to have infringed his Community law rights by preventing him from making his claim and the 3-year time limit should not be disapplied.”

How does Her Majesty’s Revenue & Customs intend to set out to show that a person never intended to submit a claim, and didn’t intend to submit one under the then six year time limit for claims?

There is obviously a lot of money at risk here for the Treasury to agree to Her Majesty’s Revenue & Customs spending probably tens of thousands more on taking the matter to the House of Lords.

I find it hard to imagine how one can make a decision nearly ten years later that a person would not have made a claim within the transitional period that wasn’t included in the legislation. It seems to me that this is what these arguments and the resultant litigation have all been about - there was no transitional period but there should have been. Her Majesty’s Revenue & Customs appear to have failed in their defence of there being a transitional period and are again clutching at straws to prevent the Exchequer haemorrhaging vast amounts of money.

The problem they face is that a business is likely to argue that they didn’t make a claim at the time because they thought they were out of time because of the new rules. As it has now turned out that they were not out of time it would appear reasonable for them to be able to make a belated claim as the rules were incorrectly implemented at the time.

Her Majesty’s Revenue & Customs should look on the bright side: at least the three year cap hasn’t been ruled unlawful per se.

Catering

2006-08-21T15:20:00.000+01:00

HMRC have just published a new business brief - 12/06 - in which they set out a change in their policy and definitions concerning catering. This has come about because of an appeal by Compass Contract Services Limited that Customs have decided not to pursue any further through the Courts.

The issue involved whether Compass' catering facilities in BBC premises were part of the whole premises for determining whether any cold food they sold was for consumption on the premises. The Court found that the areas used by Compass in this instance were sufficiently distinguishable for cold food sold and taken away from the Compass location was eligible for zero-rating. Customs have indicated that they have changed their policy and will be issuing an updated version of the relevant VAT Notice (709/1) in due course. In the meantime, if you run a catering business, you may want to have a look at the business brief and consider whether you can make a claim for past overpaid VAT.

MTIC or Carousel Fraud

2006-06-26T15:56:00.000+01:00

MTIC = Missing Trader Intra-Community (Don't you just love acronyms?)

What is it? It's when goods go round in a loop from business to business, leaving and entering the UK at least once, and one (or more) of the businesses runs off without paying over the VAT it has collected to HMRC. This is beginning to have an impact upon businesses in many trade sectors although it usually is only carried out where the goods are high value low volume goods.

To help combat the fraud HMRC have tightened up the VAT registration procedures to the extent that instead of taking two or three weeks to get a business registered, it can take three or four months! This can adversely affect a businesses ability to trade because until it has a VAT number it can't show VAT on it's invoices, so customers can't recover the VAT so don't buy, etc.

Another point to bear in mind is that under the current legislation, a business that is not part of the fraud may be drawn into it unwittingly because it didn't take reasonable precautions to ensure its customers and suppliers are not involved.

How might you spot it?

If you were offered goods that were cheaper than usual, this might indicate something amiss. Perhaps you know the person selling the goods, and the goods are not in their usual line of business. You might be offered a good price by a potential purchaser who suggests you buy the goods off a particular source. HMRC are saying that if it seems too good to be true, it probably is, and you need to check it out thoroughly to avoid being caught up in possible fraud. Be prepared to walk away from a deal that you think may not be above board - for whatever reason.

Partial Exemption

2006-06-22T17:21:00.000+01:00

What an exciting topic!

Latest news is that HMRC have released a new version of their VAT Notice, 706 Partial Exemption, to replace the October 2004 edition. The note from HMRC says that the notice has been updated to include the changes from the 2005 Budget - yes, the 2005 Budget!

That might seem a bit late, especially as changes were announced in the 2006 Budget, but they are for a future release and have yet to be put into the VAT Regulations. The changes are currently the subject of a consultation by HMRC with various bodies. It has to be said that the measures they want to introduce are rather draconian as they will affect up to 140,000 businesses that fall into the partial exemption regime, but are really only intended to affect the 100 or so most complex partial exemption special methods. The impact seems to be rather wider than HMRC are claiming, and may have adverse effects on quoted companies because their auditors may qualify their accounts because of the uncertainty being introduced by the proposed rules.

What was that? What are the proposed rules? That anyone proposing a special method to determine how much input VAT they can recover has to sign a declaration to the effect that the proposed method is fair and reasonable. HMRC are then able, if they get the law changed, to decide at a later date that the method is not fair and reasonable and that the person who made the declaration knew or should have known that it was not fair and reasonable, and require that it be changed from the date of implementation, subject to the three year cap. This is according to HMRC to lead to greater certainty for the business. Most pundits expect the outcome to be the opposite!

Time for a break! Well done for getting this far!

Which Department?

2006-06-20T15:38:00.000+01:00

I know this all happened a over a year ago now, back in April 2005, but I was reminded of the difficulty that still surrounds the change of name when the Inland Revenue merged with Customs & Excise today when I was reviewing a paper I had prepared based on some old material. There, buried in the depths of the material were references to Customs & Excise. Thank goodness for search and replace. I was able to quickly replace every reference to Customs & Excise with the department's new name: Her Majesty's Revenue & Customs - HMRC for short.

So, if in future blogs I refer to Customs, Revenue & Customs or HMRC they are one and the same thing.

If you're really lucky I'll find something exciting to write about soon!

In the beginning

2006-06-20T09:25:00.000+01:00

Alright, it's a new blog - sorry about the title.

The intention is to add news items and comment on UK VAT issues.

VATark

Holiday blog, September 2010

Registration Limits for UK VAT from 1 April 2010

Sponsorship - can it be zero-rated as charity advertising?

Criteria for zero-rating

What is sponsorship?

So, can advertising by a charity be zero-rated as part of a sponsorship deal?

Paying VAT by cheque? You'll need to get the cheque in much earlier...

Time limits for keeping VAT records

Snow in Crawley

VAT Fuel Scale Charge - what to do after 1 January 2010

VAT: The Flat Rate Scheme - new rates from 1 January 2010

Want to know how much VAT you're paying? Here's how to work it out

Spider outside the kitchen window

Technorati code - not worth reading unless you are Technorati

Tweetie goes to Leeds Castle

VATark

Buying VAT free from abroad...

Can I claim back VAT on car parking charges?

VAT registration woes..

I've paid the assessment so why does my accountant say I have to pay *more* money to HMRC?

Doing VAT returns online...

A quandry...

Fuel Scale Charge

Recently updated items on HMRC's website

VAT Registration limits

Do you deal in computer chips or mobile phones?

What? No VAT invoice?

Weald Leasing - Revenue & Customs Brief 39/07

MTIC fraud - further setback for H M Revenue & Customs

Customs want to have their cake, and eat it

Catering

MTIC or Carousel Fraud

Partial Exemption

Which Department?

In the beginning

I've paid the assessment so why does my accountant say I have to pay more money to HMRC?