Winters Chartered Accountants and Registered Auditors
29 Ludgate Hill
London EC4M 7JE
England, UK
Tel:
+44 (0) 20 7919 9100
Fax:
+44 (0)
20 7919 9019
e-mail:
info@winters.co.uk
WINTERS VAT NEWSLETTER
August 2007
In this issue:
Revenue & Customs Business Brief 55/07
HMRC have published VAT Business Brief 55/07, it sets out their new policy relating to the VAT treatment of computers made available by employers to their employees under the home computing initiative (HCI). Although there would be private use of the computer, HM Revenue & Customs allowed full VAT recovery as long as there was some business use. As a consequence of withdrawal of the HCI tax exemption from the 13 August 2007 full VAT recovery without adjustment for private use has been withdrawn. In future an apportionment must be made. The amount of VAT at risk may not be large this will clearly be an issue that VAT officers will be looking for in forthcoming inspections.
Revenue & Customs Business Brief 56/07
Business Brief 56/07 covers the consultation relating to “Lennartz Accounting” regulations that were due to come into force 1 September 2007 but have now been delayed until 1 November 2007.These regulations will apply when a business allocates an asset wholly to business purposes and recovers the VAT charged upfront but can account for VAT on any non business use in subsequent VAT returns. Previously the life of an asset of this nature was considered to be 25 years but the new regulations will limit this to 10 years. If this method has already been employed we suggest that it reviewed so that the effects of these new regulations can be considered.
Revenue & Customs Business Brief 58/07
Business Brief 58/07 is HMRC’s reaction to claims of overpaid output tax from fund managers following the JP Morgan Fleming Claverhouse trust Plc. HMRC consider that this case only affected investment trust companies (ITCs) and they will refuse to accept any other claims under this case.
HMRC VAT Information Sheet 11/07
HMRC have published this information sheet which affects suppliers of medical prescription goods that are liable to VAT at the standard rate and the suppliers are not retail pharmacists. For example companies supplying Stoma and Incontinence care products that are delivered to patients homes. HMRC have been concerned that these suppliers have not accounted for VAT on these goods at the correct time. They have been waiting until they have been paid from the Prescription Pricing Authority (PPA).Whilst this treatment has technically led to a delay in the declaration of output tax, HMRC have accepted the problems experienced and are prepared to allow the declaration treatment to continue but this is dependant upon formal approval being given. Any supplier that is involved in this type of supply must write for approval as soon as possible.
Sale of a Business as a Transfer of a Going Concern
When a business is sold as a transfer of going concern, providing certain conditions are met no VAT is due but in the past records were always kept by the transferor. However from the 1st September 2007 regulations have changed so that the transferee is required to keep the records unless the Commissioners or the transferor has requested otherwise.
The House of Lords has published its judgment in a direct tax case of whether HMRC should pay an award compound interest where tax has been mistakenly overpaid due to the incorrect implementation of EU legislation into UK Law. Although the case relates to direct tax the principles relating to interest payments can be applied to VAT and in particular to motor car dealers and their claim for a refund of overpaid VAT on demonstrator bonuses. If you are in the position of having made a refund claim for overpaid tax the position regarding interest should be reviewed.
This does seem to be the flavour of the month at the moment. However in a recent Tribunal a case of MP Jamieson he successfully argued that he should not account for VAT on the full charge to his customers, which included the test fee and for arranging the test, but merely on the difference between what he paid the approved testing station and his marked up figure. Any current garage proprietors who believe they are in this situation should consider their position as HM Revenue Customs appear to be targeting this type of transaction.
Betting, Gaming and Lotteries
Following the introduction of the Gaming Act 2005 the VAT exemption for betting, gaming and lotteries has undergone considerable changes from 1 September 2007 with revised definitions for exemption now potentially available.
Residential caravan parks
HMRC have just won a significant victory relating to VAT treatment of the supply of concrete “pitches” for residential caravans. There was a restriction on occupancy so that during the whole of February the home owners could not live on site. HMRC argued that this meant the pitch supply was of a seasonal pitch and standard rated, the business argued exemption. The Tribunal initially agreed with the taxpayer but the High Court overruled in favour of HMRC.
If you would like any further information on the above topics please call: Allison Broadey on 020 7919 9100 or e.mail allison.broadey@winters.co.uk
Disclaimer - for information of users
This newsletter is published for the information of clients. It provides
only an overview of the regulations in force at the date of publication,
and no action should be taken without consulting the detailed legislation
or seeking professional advice. Therefore no responsibility for loss
occasioned by any person acting or refraining from action as a result of
the material contained in this newsletter can be accepted by the authors
or the firm.
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