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HMRC targeting businesses that trade above the VAT registration limit

vatark — Mon, 06 Jun 2011 08:25:25 +0000

HMRC targeting businesses that trade above the VAT registration limit

HMRC has published a press release in which it has announced a compaign to target businesses that have turnover above the registration limit which have failed to register for VAT. HMRC will use information to which it already has access, e.g. direct tax data, to assist in its search for such businesses, as well as other means.

HMRC intends to invite such businesses to voluntarily register during the campaign and is likely to offer a reduced penalty over that usually applied for late registration. For late registration the penalty is a percentage of the amount of VAT due from the date from which registration started to the date on which HMRC was notified. The longer the delay the higher the penalty. Although the penalty might be reduced there is no guarantee, and it is still likely to be on a sliding scale.

If you are trading above the registration limit and have yet to register for VAT, you need to take action sooner rather than later because the longer you wait the bigger the penalty you will have to pay.

For more information on registration limits visit my VAT Registration Limits page.

If you need help deciding whether you must register for VAT, ask your accountant or find a local VAT specialist to advise you.

Got any views on this? Leave a comment below.

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Evading VAT on cars brought into the UK

vatark — Fri, 03 Jun 2011 08:12:06 +0000

Evading VAT on cars brought into the UK

It seems that there are some people who are avoiding paying VAT on vehicles they bring into the UK. The issue only affects vehicles that are brought into the UK permanently. Vehicles that are in the UK temporarily have no need to be registered with the DVLA and any VAT due paid to HMRC.

Under the current system it is possible for vehicles to be registered with the DVLA without paying any VAT due to HMRC. This is to be addressed in a joint initiative between HMRC and the DVLA which will result in a new online system being set up.

HMRC and the DVLA have indicated they will be issuing a consultation document on this by the end of May 2011. So if you have any views on the matter respond to the consultation.

The proposal is to have the online system in place by early 2013. The new system is expected to reduce the number of vehicles that remain permanently in the UK without registering with the DVLA or paying VAT.

Have a view on this? Leave a comment below.

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Be careful where you get your VAT number

vatark — Mon, 30 May 2011 11:59:05 +0000

Be careful where you get your VAT number

This may sound a little odd. It seems that there are ‘businesses’ out there that are offering to get a VAT number in return for a payment: taken in advance. According to the note I received from the European Commission on this the proposals apparently appear to be official EU documents.

Of course, in the UK you can apply for a VAT number to H M Revenue & Customs for free. If you need to know whether or when you have to register in the UK you can find more information on the VAT Registration Limits page on this website.

For information on other VAT registration in other EU countries the European Commission provides information on its website.

If you have any views on this please leave a comment.

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HMRC pour cold water on hot take-away food?

vatark — Mon, 04 Apr 2011 08:30:20 +0000

HMRC pour cold water on hot take-away food?

I wrote about this in my article Good news for hot take-away food suppliers? a few days ago after the release of the European Court of Justice’s (ECJ) decision in Manfred Bog and others. HMRC has now published a Revenue & Customs Brief which almost makes clear HMRC’s position in relation to the impact of the decision. The case was referred to the ECJ by the German tax authorities. In Germany there is a reduced rate of VAT for foodstuffs.

The question considered by the ECJ was whether the supply by the vendors from places such as mobile snack bars was a supply of goods or a supply of services. In press articles HMRC was quoted as saying they treated all supplies of food as a supply of goods. There is no mention of that in the Revenue & Customs Brief. The brief is a lot of waffle with very little substance, although it does make clear that HMRC will entertain no claims for zero-rating.

The question has to be whether UK legislation is in line with the EU legislation. Is the supply of catering services, e.g. a restaurant, a supply of foodstuffs and thus a supply of goods? Or is it a supply of services?

One thing is clear, to get HMRC to change its stance on this will require someone to take the matter to Court. I think HMRC might be wrong about the application of the zero-rate to hot take-away food being impossible – would it be an extension of the zero-rate? Or just a redefining of hot take-away food so that it falls within the zero-rating?

Have a view on this? Leave a comment: let’s start a discussion.

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Good news for hot take-away food suppliers?

Robert Killington — Mon, 14 Mar 2011 16:21:14 +0000

Good news for hot take-away food suppliers?

Recently there have been two decisions released by the Courts which suggest that the UK is applying the wrong VAT treatment to supplies of hot take-away food.

In the first case the Upper Tier Tax Tribunal ruled in the case of Deliverance Ltd that it was important to take into account the intention of the supplier in supplying hot-food. This seems to be the wrong way to approach the matter as it leaves us with a position where the supplier has to prove that it intended to do something, rather than looking at the basic rules for determining the VAT treatment.

In the decision released last week on several cases referred to it by the German authorities it is clear that the correct view is to consider whether the supply being made is of goods (i.e. food) or services (i.e. catering). In the German cases many of the taxpayers were making supplies from kiosks or stands in public areas. The ECJ decision indicates that where there is little or no additional supply, other than hot-food, the supply is one of goods. In the instances referred to the ECJ by Germany the supplies were, as goods, eligible for a reduced rate of VAT.

How might this apply in the UK?

That is a very good question to ask!

It is clear that the simple approach of looking at whether the supply is of goods or services might provide one way of applying the ruling of the ECJ. The difficulty arises from how HMRC might approach the issue. I’ll avoid commenting on that further here as I’m sure HMRC need no help from me in considering its position – although if they ask I’ll happily answer!

The upshot of all this is that there might be a change to the current rules that would make supplies of hot take-away food zero-rated. If that happens it will be good news for Fish and Chip shops, and other take-away outlets, as it is likely to see them able to reduce their prices.

What’s your view? Leave a comment below.

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HMRC issues phone call scam warning

Robert Killington — Thu, 12 Aug 2010 14:03:29 +0000

This is a very important issue, and one of which many might be unaware. Please pass the information on and do so in a way that avoids making this spam. You can find the original press release, of which the text below is a copy, on the COI website.

“HM Revenue & Customs (HMRC) is warning taxpayers to be vigilant following reports that thieves are making phone calls pretending to be the taxman.

The fraudsters inform taxpayers they are due a tax rebate, and ask for their bank card details over the phone. They then attempt to take money from the account using the details provided. Victims risk having their bank accounts emptied and their personal details sold on to other organised criminal gangs.

The warning comes amid a recent surge in the number of tax scam “phishing” emails reported to HMRC. In the last three months, HMRC has shut down over 180 websites that were responsible for sending out the fake tax rebate emails.

Chris Hopson, Director of Customer Contact at HMRC said:

“We only ever contact customers who are due a tax refund in writing by post. We never use telephone calls, emails or external companies in these circumstances. We strongly urge anyone receiving such a phone call not to give any information to the caller, but report it to the police straightaway.

“If customers receive an email claiming to be from HMRC, we recommend they send it to us for investigation before deleting it permanently.”

HMRC thoroughly investigates phishing attacks and works with other law enforcement agencies in the UK and overseas. In the last 18 months, scam networks have been shut down in a number of countries, including Austria, Mexico, the UK, South Korea, the USA, Thailand and Japan.

HMRC strongly advises customers to:

Check the advice published at www.hmrc.gov.uk/security/index.htm to see if the email you have received is listed
Forward suspicious emails to HMRC at phishing@hmrc.gsi.gov.uk and then delete it from your computer/mail account
Do not click on websites, links contained in suspicious emails or open attachments
Follow advice from www.getsafeonline.co.uk

If you have reason to believe that you have been the victim of an email scam, report the matter to your bank/card issuer as soon as possible. If in doubt please check with HMRC athttp://www.hmrc.gov.uk/security/fraud-attempts.htm”

What’s your views on this behaviour? Leave a comment…

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Still doing your VAT Return on paper?

Robert Killington — Wed, 11 Aug 2010 06:33:09 +0000

You may know that VAT registered businesses with a turnover of more than £100,000 per year had to start doing their VAT Returns online from April 2010. HMRC has just announced that all other businesses that do paper VAT Returns will have to move to online Returns in 2012.

There are many benefits to doing your VAT Return online:

You get an extra seven days to submit the Return;

You can get extra time to pay it too: if you pay by direct debit the money is collected 11 days after the due date.

You get a receipt immediately when it is submitted. No more wondering whether it will arrive in time.

If you still do your return on paper consider moving to online returns. It is simple and easy to do.

You will need to register for the online VAT service on HMRC’s website. You will be sent a PIN (by post) so you can activate the service. After this you need to set up the payment system – allow a couple of weeks at least to get a direct debit set up. This means you should do this in good time before your next VAT Return is due.

You can always ask your bookkeeper or accountant to do this for you.

I’d love to hear your views or questions on this in the comments section below.

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Charity Advertising – pay per click now accepted as zero-rated advertising

Robert Killington — Tue, 08 Jun 2010 09:00:21 +0000

HMRC has published Revenue & Customs Brief 25/10 announcing the change of policy. Following representations from charities that pay per click advertising should be zero-rated HMRC has reviewed its approach and concluded that it should change the VAT treatment of pay per click advertising supplied to charities.

The Revenue & Customs Brief invites businesses that have supplied pay per click advertising the charities to make claims for overpaid VAT. HMRC say that claims will only be accepted for supplies made in the last four years and subject to the unjust enrichment rules. This means that claims can be made for supplies made in the last four years, i.e. back to 2006 at the time of writing, and the VAT refunded to the charities from which it was collected.

Action to take

Suppliers of pay per click advertising

You should seek confirmation from your charity clients that they qualify for the zero-rating of advertising services using the form of declaration in the VAT Notice on “Charity advertising and goods collected in connection with donations” if you consider it necessary. At the very least you need to show that the service was provided to a charity.

You should also prepare a detailed claim for submission to HMRC. The claim should include as much supporting evidence as possible.

Charities

Contact your pay per click advertising suppliers and request a refund. It will no doubt help your supplier if you provide a list of the invoices involved together with the amounts, and suitable confirmation that you are a charity. You may wish to use the form of declaration shown in Section 10 of VAT Notice 701/58 (January 2010).

If you need further help with this contact your usual VAT adviser.

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HMRC move the goal posts on making VAT payments to them by cheque

Robert Killington — Fri, 26 Feb 2010 12:48:15 +0000

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? Leave a comment below.

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The new look website

Robert Killington — Tue, 25 Aug 2009 21:02:01 +0000

Just wanted to let you know that whilst the website looks and feels different from the old one, all the information that was on the old one is in the new design, it’s just in different places.

Instead of having fixed pages for information I’ve decided to put it all into the ‘blog’ side of things. This means that I can more easily update information and mark it so that it is easily found.

You will also find some entries on here that are not VAT related in any way. This is just to prove that I do think about things other than VAT!

If you can’t find something that you know was on the old site, please ask me about it, in case I’ve hidden it somewhere obscure.

If you have been, thank you for reading.

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

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