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  • i agree with VAT-adviser. But to make this simpler note that you Reverse charge all services received from outside UK (EU and non-EU), whether the bill says so or not.

    in reply to: Showing VAT on an estimate #55953
    No you can not charge VAT unless you are VAT registered. 

    For further details on VAT registration see here:


    Member state in local laws should be in line with exempt transactions are described in art.132 and art.135 of the EU VAT Directive which are both mandatory provisions. If a Member State fails to exempt something which plainly falls within the exempt categories, a trader (or the European Commission) can take a case to the Court of Justice to enforce the Directive.

    Art. 132 relates to Exemptions “In the public interest” vs “Other exemptions” are in art.135.

    With respect to Art.132, the presumed intention is not to burden such public interest services with VAT. These entities have some social benefit and are often carried out by public or charitable bodies (although they may also be provided commercially). These include healthcare, education and sport. Art.135 is mainly concerned with activities which are commercial but which do not fit well within the normal scheme of a ‘value added tax’ because there is no clear relationship between costs and revenues – financial services and insurance, gambling, and supplies of letting land and buildings.

    The biggest distinction between art.132 and art.135 is that exemption under art.132 may be made subject to more conditions under arts.133 and 134.

    Art.134 is a mandatory provision which Member States must implement – several of the public interest exemptions must not apply where the supply is NOT ESSENTIAL to the transaction which is exempted, or whether the PURPOSE OF THE SUPPLY IS TO OBTAIN ADDITIONAL INCOME for the supplier from transactions which compete directly with commercial operations which have to charge VAT.

    Art.133 allows Member States to impose conditions on the bodies which make supplies within art.132. Art.132 supplies by ‘public bodies’ (e.g. government departments) must be exempt; non-public bodies may be excluded from the exemption if they do not meet various conditions, for example if they are commercial organisations trying to make a profit. Another permissible condition is for the organisation to be ‘managed on an essentially voluntary basis’, which means that the senior management must not be paid salaries. On 21 September 2017, CJEU issued a decision that the VAT exemption for cost sharing groups cannot apply in the banking and insurance sector re (DNB Banka, Aviva and EC v Germany).

    in reply to: Can a Pension Scheme be VAT registered #55918

    Yes the Pension Scheme Trustees must register for VAT and can reclaim the VAT charged (NOT THE PENSION FUND ITSELF).

    It will be registered as Mr X (and any other trustees) and the Y Pension Fund. The fund is registered under section 46 of the VAT Act 1994 and Regulation 8 of the Value Added Tax Regulations 1995. This means that all the trustees are jointly and severally responsible for anything done under the VAT Act by the other trustees. There is a separate registration for the activities of the trustee and non-trustee activities. If, however, these are not distinguishable they will have just one registration (for instance if the sponsoring employer is the sole trustee).

    HMRC will want the names and addresses and signatures of all the trustees. HMRC cannot make the trustees sign a VAT 2 as this is a form solely for partnerships, but it is often used as a matter of convenience. HMRC may also ask for other independent verification of who the trustees are (e.g. sight of the Trust Deed) to ensure the correct ‘person’ is being registered. As the trustees are jointly responsible for each other’s actions it is possible for one trustee to sign and submit the VAT 1. HMRC would then need to verify the names and addresses of the trustees at a later date.

    in reply to: What happens to UK VAT if UK leaves EU without a deal #55831

    If the UK leaves the EU without an agreement, the UK will stop being part of EU-wide VAT systems and all EU driven laws/systems will impact UK businesses.

    Currently the Directive 2006/112/EC: The Principal VAT Directive, contains the detailed rules and the overall principles for applying VAT in all the EU Member States. Although it is mandatory where it applies, Member States must implement it in their own country by incorporating it within national law. EU law has direct effect ie if appropriately framed, confer rights on individuals which the courts of member states of the European Union are bound to recognise and enforce before the national courts.

    Other EU laws impended in EU legislation include ‘Fiscal neutrality’ and ‘Effectiveness of rights’. Fiscal Neutrality means that the VAT should impact in the same way on anyone carrying on the same activity within the state, otherwise the tax would ‘distort competition’ and harm the proper working of a free market in goods and services. Effectiveness of rights means where the EU law gives a person rights, national law should not take those rights away.

    Businesses involved in importing goods from the EU, exporting goods to the EU, supplying services to the EU, and interacting with EU VAT IT systems such as the VAT Mini One Stop Shop (MOSS), using TOMS will certainly be affected. HMRC has been engaging with such businesses esp. the travel industry to minimise any impact.

    No one knows what the No Deal situation will be like – but I guess it would be a mini Deal with basic agreements on imports, exports, VAT etc.

    in reply to: VAT for charities that get some income #55935
    in reply to: VAT for charities that get some income #55934

    The four-year cap applies to registered persons, who are not being fraudulent.

    If today HMRC discover that a person should have registered, say, ten years ago, HMRC can register that person with effect from ten years ago and issue a first VAT return which covers all ten years. Because the return ended within the last four years, HMRC can assess all ten years under VATA 1994, s. 73(1) (VATA 1994, s. 77(1)(a)).

    Rastegar (t/a Mo’s Restaurant) [2011] TC 00733 commenced trading in December 1998 and instructed an accountant to deal with his tax obligations, but the accountant failed to notify HMRC of the liability to VAT register. Taxable turnover exceeded the registration limit at the end of April 1999, so he became liable to register by the end of May 1999. When HMRC learned that Rastegar was unregistered, they compulsorily registered him from 1 June 1999 and issued an assessment for underpaid VAT, based on the income tax returns.

    First, Rastegar unsuccessfully claimed that HMRC knew, through the information in his income tax returns, that his turnover exceeded the VAT registration limit earlier than 9 February 2008, being one year before the issue of the assessment. However, the First-tier Tribunal decided that the assessment was not time-barred by VATA 1994, s. 73(6) as being made more than one year after evidence of facts, sufficient to justify the making of the assessment, came to HMRC’s knowledge. The period of one year started when evidence of facts came to HMRC’s knowledge. The crucial facts came to light when a tax return had been filed which suggested that the turnover exceeded the registration threshold and when HMRC were unable to trace a VAT registration. The tribunal decided that the last of those facts came to HMRC’s knowledge no earlier than 15 February 2008, when HMRC established that Rastegar was not registered. On that basis, the assessment issued on 9 February 2009 was not out of time under s. 73(6).

    Also, Rastegar unsuccessfully argued that the assessment is time-barred in respect of the part concerning periods that ended more than three years before it was issued, being the then three-year cap in VATA 1994, s. 77(1). The tribunal decided that, under s. 77(4), if VAT was lost in circumstances giving rise to a penalty under VATA 1994, former s. 67, including for failure to notify a liability to register, then a time limit of 20 years applied.

    Hope this answers your questions.

    in reply to: Filing UK VAT returns that are not in GBP #55833

    You can only file GBP VAT returns. However there are a number of options available for a company who has foreign currency VAT transactions. These are:

    – Use HMRC foreign currency rates. HMRC publishes foreign exchange rates for over 120 countries and currency zones. The data is based on daily figures published in the Financial Times. There is sometimes a wide discrepancy with market rates.
    – You can use exchange rates published each day from a recognised source – e.g. aOANDA
    – You can write to HMRC to try and get permission to use the method that your accounting package uses as default.

    Hope this answers your questions.


    The letting of sports facilities is normally standard-rated (Item 1(m), Group 1, Sch 9, VATA 1994).

    There are circumstances where the letting of sports facilities can be exempt:

    (i) here are special rules for the use of sports facilities where there are lets in excess of 24 hours or for the hire of facilities to the same user for a regular series of events (discussed in more detail below). The supply of sporting facilities becomes eligible for exemption in both these cases. However, the facilities can still be opted in to tax by waiving the exemption. You can see the ’24 hour rule’ on para 16, Group 1, Sch 9, VATA 1994. Also read VAT Notice 701/45.

    (ii) If the sporting facilities are let for non-sporting purposes then the supply will be exempt. An example of this will be the letting of a swimming pool for a fashion shoot.

    Take a look at an interesting case below:

    Pritchard t/a Dance at 8 [2003] BVC 4,090 taught ballroom dancing from a room which they rented twice a week for up to three hours. At other times, the room was hired to other organisations. No VAT was charged in respect of room hire for keep fit classes and for movement to music, but VAT was charged to Pritchard.

    The tribunal decided that to be within item 1(m), the room must be suitable for the use for which it was let and must be intended to be let for that purpose. The room was not ideal for teaching dance, especially as it had a concrete floor covered with fibreboard, but it provided a suitable facility for the teaching of ballroom dancing for which purpose it was intended to be used and was used. The supply was, therefore, excluded from exemption by item 1(m). The supply was not brought back within the exemption by Note (16), as the dance school was not a ‘school’ within Note (16). Although there is no definition of the word school for VAT purposes, the dictionary definitions centre on the young age of the pupils. Whilst the appellants may have taught young persons, there were no restrictions on age. Thus, the supply of room hire to Pritchard was standard-rated.

    in reply to: VAT rate flat scheme for farmers & delivery fees #55921

    The Agricultural Flat Rate Scheme (AFRS) allows farmers to charge a fixed levy of 4% on certain services to VAT registered customers. This 4% levy is not VAT and can be retained by the farmer; however, it can be reclaimed as though it were VAT by customers. In effect it is a government funded supplement that is intended to compensate farmers for the loss of an ability to reclaim VAT on expenditure. AFRS will apply to processing by a farmer of products derived from his own activities within the designated activities using only such means as are normally employed in the course of such activities. The full list of designated activities are in VAT Notice 700/46. Supplies of agricultural services by a person who also carries out one or more other designated activities falling within the designated activities above also falls within AFRS.
    Farmers can use the AFRS as long as their income from non-farming sources does not exceed the VAT registration threshold – it does not matter that their farming income may exceed that limit.
    If you’re already a flat rate farmer and your non-farming turnover goes over the threshold you must leave the scheme and register for VAT. But, you should also read paragraph 4.4 of the Agricultural Flat Rate Scheme (VAT Notice 700/46. If your non-farming turnover is above the threshold and you’re already registered for VAT, you must remain so.

    If delivery cost is built into the normal sales price, VAT is accounted for on the value of the goods based on the liability of the goods themselves. Therefore, the 4% can include the total value of sales including delivery costs. This applies whether or not delivery is required under the contract. However, care should be taken to ensure there is no room for abusive actions which will invite HMRC to think that the delivery/transport service is a separate activity.

    in reply to: VAT on fuel #55835

    There are different ways of reclaiming VAT on fuel, if you don’t pay a fixed rate under the Flat Rate Scheme.

    1. You can reclaim all the VAT on fuel if your vehicle is used only for business.

    2. There are 3 ways of handling VAT if you use the vehicle for both business and private purposes. You can:

    (i) reclaim all the VAT and pay the right fuel scale charge for your vehicle
    (ii) only reclaim the VAT on fuel you use for business trips – you’ll have to keep detailed mileage records
    (iii) choose not to reclaim any VAT, eg if your business mileage is so low that the fuel scale charge would be higher than the VAT you can reclaim

    If you choose not to reclaim VAT on fuel for one vehicle you can’t reclaim VAT on any fuel for vehicles used by your business.

    in reply to: VAT on wholesale telecommunications #55933
    in reply to: VAT on client entertainment – can I claim that back? #55917

    Entertainment is defined as any one of the following:

    provision of food and drink
    provision of accommodation (such as in hotels)
    provision of theatre and concert tickets
    entry to sporting events and facilities
    entry to clubs and nightclubs
    use of capital assets such as yachts and aircraft for the purpose of entertaining.

    Input VAT on staff expenses are generally fully recoverable. However business entertainment (except on foreign customers ) is not recoverable.

    Also note input tax is deductible if the entertainment is ‘reasonable in all the circumstances’, while output tax is chargeable if the costs have been put to purposes other than those of the business within SI 1993/1507.

    in reply to: VAT on samples of a new product #55920

    There is no output tax on “real” samples (see EMI Case). If samples are given in exchange for a return then its not really samples.

    Samples for advertising exchange can be taken to be barter trade – Naturally Yours Cosmetics —- barter trade and gifts based on what would pay for identical goods, which is the manufacturing cost, not the wholesale price (though maybe subjective).

Viewing 15 posts - 1 through 15 (of 99 total)