Member Since: 20th Mar 2002
28th Mar 2014
I would advise your client to follow the guidance in HMRC Notice 703 (Exports) para 7.5 which give helpful detail about obtaining satisfactory proof of export through Royal Mail. Failure to provide acceptable evidence can be very expensive if the VATman comes to call.
6th Jan 2011
Might be mixture of liabilities
Just combing through unanswered questions and found this one. Hope I am not too late with reply. Depends on agreement between the parties, and not easy to answer without seeing that detail. But it is common for the parties to agree that the landowner contributes the land and the contractor the labour, machinery, seeds, fertilisers etc and the parties then share the profits. Normally the contractor invoices the landowner for 50% of his costs when his work is done but before the crop is sold. If that is the arrangement here, then the guidance is that the VAT liability of the contractor's charges follows the liability of the original supply. I take this to mean the contractor is in effect re-supplying the items he has bought to the landowner. In which case seed will probably be zero rated, fertilisers and sprays standard rated.
6th Jan 2011
Do you mean HMRC Manuals
By "Manuals" you might be referring to the highly detailed internal guidance manuals issued by HMRC to their staff, but which are in the public domain. These can be found on HMRC's website. Go to the home page, then "Library" (quick link on left hand column); then "Publications" (first link on Library page) and on the next page you will see "Manuals" in left hand column.
You need to read the caveat issued by HMRC in the Introduction section to the Manuals, but they are extremely useful for ascertaining HMRC's views on all kinds of tax regimes including VAT.
6th Jan 2011
Look for the de minimis rules
Hope I am not too late with this reply.
Up to 31/12/10 the supply of teaching was deemed to take place where the teaching was physically carried out (VATA 1994, Sch 4A, para 4); so the place of supply would have been outside the EU as you surmise, hence outside the scope. From 1/1/2011, B2B supplies are deemed to be made where the customer belongs; so again might well be outside the scope. B2C supplies continue to be made where the activities take place. Notice 741A para 8.1.1 explains this in Table 3. The rule for input tax recovery is in VATA 1994 s.26. This allows input tax recovery in relation to supplies made outside the UK, but only if they would have been taxable if made in the UK. There are some defined exceptions for supplies that would be exempt in the UK, but I will not go into those; teaching is not among them. So the conclusion is that in principle you cannot recover input tax related to these teaching supplies; however the input tax may still be reclaimable if it is within the partial exemption de minimis limits, since the de minimis applies also to input tax related to supplies that would be exempt if made in the UK (VAT Regulations 1995, reg. 106).
5th Jan 2011
I agree that the common ownership would make the two companies eligible for a VAT Group, hence they cannot be in the FRS (VAT Regulations 1995, reg. 55L).
This restriction is based on the requirements relating to "control" for Group registration purposes, which are strictly defined in VATA 1994 s.43A. That is how the UK legislation applies the "economic or organisational links" criteria which stems from the EC VAT Directive.
So your client should take care because the application form for the FRS includes the statement "I am eligible for the Flat rate Scheme." It might have got registered incorrectly.
5th Jan 2011
It depends on how it is held out...
The VAT standard rating for holiday lets does not work in the same way as the FHL rules for SA. There is no neat dividing line based on any time scale. The legislation refers to "the grant of an interest in, right or licence to occupy holiday accommodation" (VATA 1994, Sch 9 Group 1, Item 1(e)). Note 13 to the Group says “Holiday accommodation” includes any accommodation in a building, hut (including a beach hut or chalet), caravan, houseboat or tent which is advertised or held out as holiday accommodation or as suitable for holiday or leisure use…" which ought to be enough to decide most cases. Of course it is always helpful to know HMRC's view, and you can find that in VAT Notice 709/3/02 at para 5.
6th Aug 2010
Invoicing requirements not clear
I don't think there is any specific legislation that lays down exactly what has to be shown on such invoices. If the place of supply is where the customer belongs elsewhere in the EU, then the supply is outside the scope of UK VAT (not zero rated). However I believe HMRC will want to see the customer's VAT number on the invoice as evidence that the reverse charge applies. It would also be sensible to add some narrative along the lines of "no UK VAT - reverse charge applicable" or similar.
The supplier will need to complete and submit an EC sales List for all supplies of services into the EU that are subject to reverse charge by EU VAT-registered customers. This is a new requirement from 1/1/2010 and mirrors the rules for supplies of goods into the EU. The VAT Helpline advice seems to have become horribly garbled; as described in KTS' post, it would be just plain wrong. The correct position is quite clear in HMRC's own publications. You can find plenty of advice if you go onto HMRC's website and do a search under EC Sales Lists.
6th Aug 2010
Be careful here
If property is jointly owned, HMRC generally regard the joint owners as "partners" for VAT registration purposes. If you are saying that the joint owners of the holiday home are the exact same joint owners of other residential properties, then the partnership VAT registration will indeed have to include all the properties, plus any other business activities that they may undertake jointly. They can't split the registration to include just the holiday home business.
However is inclusion of the other rental properties necessarily such a bad thing? The partnership registration will be partly exempt, but it could work in their favour depending on the partial exemption rules. If the input tax incurred on the exempt rental properties is de minimis, it becomes recoverable along with the input tax on the holiday home. I have had a few clients in similar circumstances who have gained in this way.
Agree with geoffwolf that the consultancy will be outside the partnership registration as long as it is run by just one of the individuals.
6th Aug 2010
Opting to tax may not be a bar to deregistration
Just a point about your statement that the partnership cannot deregister because "they rent out a building that is registered for VAT". I assume you mean they have opted to tax on the building? If so, that does not necessarily debar them from deregistering. If you are worried about the VAT liability that arises on taxable assets at the time of deregistration, bear in mind that in the case of opted buildings, you only have a liability if you claimed input tax on the original acquisition of the building.
Merely opting to tax at some later date does not create a liability on the deemed disposal at the time of deregistration. See HMRC Notice 700/11 (April 2010 is latest edition) paras 6.2 and 6.3. The option does not disappear of course; if the clients go over the threshold again in future the option kicks back in and any grant of the building becomes taxable.
13th Apr 2010
Sounds like an exempt grant
Anonymous: your client needs to define the exact service he is supplying to the other chiropractors. It seems to me that he must have granted the other parties a lease or licence to occupy the premises (how else are they allowed to run their businesses from your client's property?) In which case the question is then whether the charge he is making is consideration for the grant of that lease or licence, which would make it exempt. Preferably get this agreed in writing - not just to satisfy HMRC on the VAT point but also to protect your client in case of dispute with the other parties. Reception and other centralised facilities can then be treated as part of the exempt supply. See VAT Notice 742 para 11.7 for more detail. Your client could of course opt to tax if he wanted to.
But if for some reason your client is allowing the other parties to occupy rent-free and he is just charging for the additional facilities he is offering them, i.e. there is no link between the charges and the grant of the right to occupy, then I think the charges would have to be taxable. In which case, your client needs to look out for the registration limits.