BUDGET 2010 - VAT changes

As ever, the Budget didn’t appear too interesting in terms of VAT changes. Indeed I came across a headline indicating that there would be no changes to VAT.


Look a bit further though, and there were quite a few changes, although admittedly nothing to get anybody terribly worked up about.

• VAT registration limit goes up to £70,000 from 1 April 2010 and the Fuel Scale Charge rates have been increased again, for VAT periods starting on or after 1 May 2010.


• Zero rating will no longer be available for aircraft on the basis of weight. From 1 September 2010, aircraft (and spares/repairs) will only be zero rated where used by airlines “operating for reward chiefly on international routes”.


• ‘Place of supply’ of gas, heat and cooling will change from 1/1/2011. The detail is a bit tedious, but if you want to know all about it please ask.


• Certain postal services provided by Royal Mail will become liable to VAT from 31/1/2011, chiefly in the realms of parcel deliveries. ‘Domestic mail’ remains exempt.


• From 1/11/2010, a reverse charge will be introduced to combat ‘Missing Trader’ fraud by certain miscreants buying or selling emissions allowances. If you’re doing it, you know who you are..


• From 1/1/2011, the rules surrounding the use of the “Lennartz” procedure are changing, such that businesses hoping to utilise it (or who have already) will be adversely affected. In essence, the Lennartz treatment allows a business to reclaim VAT in full on an asset that has both business and private use, at the time of purchase. Then, as time progresses, any private use is subject to output VAT, as and when it takes place. HMRC have never liked it, but as it emanated from a European Court ruling, they have been obliged to allow it. They are now restricting it somewhat, and also making certain aspects of it retrospective. I just love the following phrase: “ The legislation will ensure that this position is treated as having always had effect.”  A quick Google on the words “retrospective taxation” suggests that this might be in breach of Article 1 of Protocol No.1 to the ECHR. Further digging, however, suggests that this topic is well beyond the scope of this blog, and I don’t intend to get into legal argument on this point – I’ll leave this to those better equipped to consider the matter.

Like I said, nothing too dramatic, but if you require further information about any of the items, please let me know.

http://www.davebrownvat.com

Mr Angry is let loose again

Yes, here it comes again - a vitriolic attack on HMRC.  And no apologies for this.

A few weeks ago, I was asked to help out a client who was getting some grief from HMRC about some outstanding returns - and about £70k allegedly owing.  I duly wrote to HMRC, on 19 February 2010, but received no reply.  I then tried phoning the National VAT Advice Line.  I should have known better, as all I got was an answering machine telling me they were busy.  I tried on numerous occasions, at different times of the day, for the next week or two.  No joy, still the same supercilious woman apologising that they were busy.  How can they be too busy at 7.30 pm?  I later emailed, twice, but again, at the time of writing this, I have still not had a reply. 

Over the past few years I have become increasingly irritated at the refusal by HMRC to provide sensible written advice to taxpayers and I have all but given up on this, despite enlisting the help of various accountancy bodies - the CIOT and the IIT to name but two.  I was even invited to a meeting at the Treasury by HMRC, but soon realised that those in charge of telling the front line staff how to respond were on a different planet from the rest of us.

 I am sure that HMRC acknowledge that most taxpayers are anxious to get it right - to declare the right amount of tax at the right time.  However, there is also an acknowledgement that VAT law is quite complex, but sadly they seem to forget that  not every businessman is a VAT expert.  Just occasionally, therefore, it would be nice to think that when someone asks for help, that help could be given.

Nope, sorry they don't.

It is either "Sorry you haven't covered the 20 points on the checklist" that are required before you can even ask, or else "We are not obliged to provide an answer when the topic is covered in our published guidance."  OK, but do you really expect a builder to find your website?  Then find the requisite publication?  Then find the appropriate paragraph in that publication?  And then be confident enough with the answer to be able to apply whatever the answer is?  Well, sorry, this is the real world, and you are sadly deluded if you think that this is acceptable behaviour for civil servants to adopt.  You might be able to find and understand the guidance.  I might be able to find the answer, but do you really expect a builder to be able to find and apply the answer without a little help? 

Oh, and another thing - when I write to you seel=king confirmation of something, why do you bother telling me where to look in the guidance?  Do you not think that when a VAT consultant writes to HMRC, they have not already looked there?

Sunday Times article about listed buildings

I've thus far resisted the temptation to turn this blog into a Mr Angry column, but I've got to record an element of displeasure about an article about listed buildings that appeared in the Sunday Times a couple of weeks ago.  It contained an incorrect statement about VAT, attributed to me.

A few days before it appeared, I had a call from one Rosie Millard who is apparently a journalist and media person.  She wanted to know about VAT and listed buildings, and I duly obliged with answering her questions.  The scenario she asked me about was refurbishing a derelict building that had been empty for a number of years.  I told her that this would be zero rated for 'alterations' and 5% VAT for repairs.  She was in a bit of a rush and I wasn't confident that she had understood what I was saying, so I asked her to let me see what she was going to write.  She refused.

Yes, you guessed, she got it wrong and blithely told the world that repairs to listed buildings are liable at 5% VAT.  And since then I have had a large number of calls from listed building owners asking me if I really meant what I allegedly said.  Needless to say, I have pointed out who the real culprit was.

I did email Ms Millard to point out her error, but she has not replied.

Rant over.  [Until the next time someone annoys me...]

VAT return payments post 1 April 2010

For most businesses, VAT returns have to be completed and submitted together with electronic payment after 1 April 2010. Existing VAT registered businesses with turnover less than £100k can continue to submit paper returns, and can still pay by cheque. However, HMRC are going to make this a touch more difficult, as they now insist that payment must be received and cleared to their bank by the due date for the return. This can take up to a week, or longer, depending on the quality of the postal service.

Penalties WILL be imposed for payments that are cleared late. No longer can you simply post the return the day before and get a Certificate of Posting. Returns will have to be sent at least a week before the due date and although it might not help, I recommend that you still get a Certificate of Posting. [Or even send it recorded delivery, so that you can tell what date it was received by them.]

I find this new measure somewhat petty, if not draconian. Clearly, they want everyone to pay electronically but if you are at the mercy of the Post Office there is going to be little comeback if the letter takes three or four days to reach HMRC. Even then, it could take a couple of days to be processed before hitting the banking system.

Listed Property Show - 20th and 21st February 2010

Once again I am headed off to Olympia in London for the Listed Property Show, for two days of providing one-to-one advice to those who perchance own a listed building. In addition, I will be giving a couple of talks about the riveting subject of VAT, which will doubtless provoke interest, boredom, or even sleep in equal measure amongst the audience. If you wish to enjoy the other delights on show please do not be put off by the VAT angle. It is an interesting show, including talks, demonstrations and displays by craftsmen and others with a particular interest in listed buildings - and it's free!

www.davebrownvat.com

VAT changes - Pre-Budget Report

Once again, changes announced by HMRC left me totally unmoved, as they announced the proposed changes some months ago. In short:

A revised electronic means of reclaiming VAT incurred in other EU countries.

Changes to the "time of supply" rules for intra-EU supplies.

Changes to the "place of supply" rules for intra-EU supplies of services.

Introduction of EC Sales Lists for intra-EU supplies of services - hitherto only required for supplies of goods.

If you consider that you might be affected by any of these changes, please ask.

Intrastat Changes

There is a reasonably good chance that you will not have heard the expression "Intrastat", let alone know what to do with it! In short, the EU demand that each Member State collects statistical information on trade going between Member States. For certain levels of trade, this is collected using the "intrastat" procedure. Hitherto, the level for both sales ('dispatches') and purchases ('arrivals') was £270,000 annually. The levels are now changing, from 1 January 2010 to £600,000 for arrivals and £250,000 for dispatches. If your sales or purchases exceed those levels, you are then roped into the system with no chance of escape - well, not for a while anyway. Please contact me if you need a more detailed explanation.

www.davebrownvat.co.uk