VAT Advice and Services

The introduction of VAT on school fees in October’s Budget is one area where there is a good element of certainty, says Rob Geary, VAT specialist at Lovewell Blake.

There has been a long-standing practice, which has been in existence for over 40 years, that has granted furnished holiday homes beneficial tax treatment compared to other residential property landlords.

With the new Labour government promise to hit the ground running in the first 100 days of power, no time was wasted announcing their first tax changes.

Whilst the rise in bank interest is welcome news to some, for others it could have an unexpected VAT implication.

From today (13 November), HMRC will no longer be accepting a paper VAT 1 form for VAT applications and will only be accepting online VAT applications.

HMRC have introduced a new VAT penalty regime for VAT returns which are submitted late or not paid on time for periods starting on or after 1 January 2023.

HMRC have announced that they are closing the existing VAT online portal at the end of October 2022.

Most VAT registered businesses have at some point queried whether they can reclaim the VAT on an expense. If the expense is a personal or non-business expense, the answer is usually ‘no’. If the expense is directly linked to goods or services that are subject to VAT at 0% 5% or 20%, then the answer is usually ‘yes’.

As employers gear up for the Christmas party season for the first time in two years, they need to take care to avoid a tax hangover.

The government confirmed on 23 September that, following concerted feedback from a range of stakeholders, the planned introduction of MTD for income tax in April 2023 will be delayed until April 2024.

HM Revenue & Customs (HMRC) has updated their guidance on the new regime for penalties and interest for late payment of tax. This is the next step in an ongoing process of unifying the rules across all the taxes.

An ongoing area of risk for both VAT registered and Non-VAT registered businesses is the place of supply of their services, as there are many small differences which can catch suppliers out. For VAT purposes, the place of supply is generally where a business is liable to charge VAT.

There is a special mechanism to recover VAT incurred on building, or converting a non-residential property into, a new home for you or a family member to live in. This is often referred to as a DIY VAT claim and is well worth exploring to recover some of the VAT costs that could otherwise be forgotten about.

When Making Tax Digital for VAT (MTD) was introduced back in 2019, it was compulsory for most businesses trading above the VAT threshold of £85,000 to keep records in a digital format and submit their VAT returns using MTD compatible software.

A recent Court of Appeal case concerning the Royal Opera House Foundation has decided that that there was no direct and immediate link between the costs of staging productions and their taxable supplies of catering etc. The production costs were found to be ‘directly and immediately linked’ to ticket sales which are exempt from VAT due to the cultural exemption rules and the VAT costs incurred on them as a consequence was irrecoverable.

The Supreme Court’s recent decision in Balhousie Holdings [Balhousie Holdings Ltd v HMRC [2021] UKSC 11] indicates that care home operators (and other entities such as charities and universities) may be able to use sell and lease back arrangements to finance the construction of new buildings without incurring a significant VAT penalty.

A recent Court of Appeal case has decided against two organisations that provided day care services.

From 1 March 2021, if your VAT-registered business provides certain supplies of construction services to another business you may no longer need to charge them VAT. This is because your customer may need to account for it under the new domestic reverse charge for construction services.

‘A recent first-tier tribunal case, Wickford Development Co Limited v HMRC, has been found in favour of the taxpayer, raising again the possibility of HMRC incorrectly interpreting the scope of the ‘Builder’s Block’, this being HMRC’s block on builders and contractors recovering input VAT incurred on goods that are not ‘building materials ordinarily incorporated in a building’.

Previously, HMRC guidance stated that when customers are charged early termination fees to withdraw from contracts, or payments are required for breach of contract, then these charges are not generally relating to a supply and are outside the scope of VAT.

Many businesses purchase vehicles to support their day-to-day operations. Whilst it may be assumed that, as a vehicle is being acquired by a business to support their activities, the VAT incurred on the purchase costs would be recoverable, this is often not the case.

The CJEU has considered a VAT case concerning the recovery of overhead VAT costs for a partially exempt business who supplied goods by way of hire purchase (the taxable supply) and the supply of credit (the exempt supply).

If your VAT-registered business provides construction services to another business you will no longer need to charge them VAT.

A recent Upper Tier Tribunal case has resulted in digital newspapers being judged the same as hard copy printed newspapers and therefore zero rated. Prior to the case, digital publications were seen by HMRC as standard rated.

There are some VAT reliefs for disabled people. These typically relate to goods, however certain building works also qualify for VAT relief.

An ‘option to tax’ is a formal declaration made by a VAT registered entity which has an interest in a commercial property or land. The interest can be freehold or leasehold.