Member Since: 23rd Feb 2009
Neil Warren is an independent VAT consultant and author who worked for Customs and Excise for 14 years until 1997.
Independent VAT Consultant
15th Jan 2020
The issue of what is a land supply or otherwise can often be a grey area and I have agreed to write a separate article on this question for Accounting Web. However, the relevant guidance as far as catering and room hire is concerned is VAT Notice 709/3, para 4.3. The online edition is dated 27 February 20219 so quite recent. This paragraph confirms that catering is only relevant if "you serve substantial refreshments", the reference to "you" being the venue charging for the room. Just hiring out a room for a fee, with the hirer sorting out his own food, is not a supply of catering.
20th Feb 2019
Hello Malcolm - agree what you say about the taxpayer possibly claiming hardship and therefore not paying the assessment while the appeals process was ongoing. While reading the case report I went to the Companies House website and looked at the last accounts for Eat Ltd - and the balance sheet is not good.
7th Mar 2017
Comment from Neil Warren:
To pick up on some specific items in the postings:
1) Motor mechanics - the exclusion of 'vehicle parts' from relevant goods will apply to motor mechanics because their FRS category is not 'transport or storage......etc' - they have their own category for 'repairing vehicles' - this is clearly ludicrous unless the final SI corrects this oddity.
2) Promotional goods - another mystery is why promotional goods were not shown as a specific exclusion in the revised Notice 733 para 4.6 about relevant goods but were shown on a bullet point slide in the HMRC webinar. We can only assume that the final SI will include these items and then a revision to Notice 733 will be made at a future date.
3) Overalls - in my view, overalls are definitely not capital goods - let's hope that motor mechanics get through enough overalls to pass the 2% test and keep them in their 8.5% category.
4) Hairdressers - hairdressers having to exclude purchases for resale because they are not part of their main activity of hairdressing is an unfortunate outcome of the latest exclusion from relevant goods for those that relate to secondary activities - a bit like my football coaching example in the article.
Overall, HMRC are clearly adopting a ruthless approach to cut out the tax avoidance that they consider to be a big problem....leaving the FRS or deregistration (if voluntarily registered) will be the best options for most service businesses after 31 March. With the likely exclusions for stationery items, gas and electricity (because of a bit of private use) as well as food and drink, road fuel, capital goods etc (specific in the SI), it must be asked what 'relevant goods' will be included to give some service traders a chance of passing the 2%/£250 test - very little it seems.
10th Nov 2016
To answer the questions in the trail:
1) A tax point is only created when a business issues a VAT invoice - so an unregistered business cannot issue a VAT invoice until it is registered. It is only a VAT invoice if it fully complies with the requirements of regulation 14 of the VAT Regulations 1995. See HMRC manual VATTOS5210.
2) A zero-rated invoice issued by a registered business more than four years ago that should have been standard rated will be out of time for both the supplier and customer so no adjustment is needed. If it less than four years old, correction can be made with a VAT only invoice etc.
21st Sep 2016
Hello Paul - spot on with what you say - the 'reverse charge' means the customer is paying the VAT - hence why the overseas supplier can then get his VAT refund.
11th Jul 2016
Thank you to everyone for the comments on my article - the individual examples are very useful - the issue about the HMRC computer putting all builders into the 'general construction' rather than 'labour only' category is one I had not thought about - how can it ever know?
I like the suggestion of Jon that the computer should offer the business owner the chance to select a category other than the one suggested, with an explanation box to support the change. I'll raise this at our ATT meeting in early September when we discuss this issue. The flat rate scheme certainly presents some challenges!
17th Jun 2015
Hello Wayne - thank you for this - I had heard there was litigation pending on this issue, which is good news to help clarify things - I also know that the topic is on the agenda for the next JVCC meeting. Regarding input tax, the recent case of Premier Foods (Holdings) Ltd was also very interesting, although I need to do more reading on it before I put pen to paper. Neil Warren
16th Jun 2015
HMRC policy should be communicated properly
I am really pleased that Accounting Web have followed up my Taxation article to cover this topic - it is very important because, as one respondent rightly said, HMRC have changed their view on something we have been happily adopting in practice for 43 years ! And the amounts of tax involved can be considerable. As a bit of further background, my first liaison with HMRC on this issue was about three months ago, to tell them there was a technical error in their guidance - I was very surprised when their policy section (via the press office) said that it wasn't an error and that was how they thought the rules applied - and our liaison developed from there. I think we are all agreed that if they do change their interpretation of any important legislation, then it should be properly communicated (and the reasons why) and not hidden away in the internal manuals............. Neil Warren
5th Jul 2010
Advance invoicing - reply from Neil Warren
This would be fine Lee, as long as the value of the advance invoice was less than or equal to £100,000 excluding VAT. The other point is that an advance invoice or prepayment is fine if it is a 'normal commercial practice' for the transaction in question and relates to the letting, hiring or rental of assets and covers a period of twelve months or less. The key challenge here is to ask whether the same invoice would be raised at the same time if there was no change in the rate of VAT. If the answer is a 'yes' to this question, there is unlikely to be any problem with the anti-forestalling legislation.
4th Nov 2009
Flat rate scheme
Hello Chris - this is correct - there is no change to the flat rate scheme with the new rules.
As a general principle, exempt, zero-rated, standard rated and reduced rated business income is included in the flat rate scheme - income that is outside the scope of VAT (i.e. where place of supply is outside UK) is excluded.
Neil Warren - VAT consultant, lecturer, author.