Member Since: 31st Jul 2008
24th Apr 2020
I think Les is replying generally rather than to your specific question:
Architects fees are not goods, they are in a service industry even though you may get a bit of paper at the end of it that particular 'good' is not what you've paid for you've paid for their services.
It matters not whether it's been capitalised, whether you've expensed it, or whether you've given it as perm and called it Eric, they are services and will need to have a tax point within 6 months of your date of registration to be recoverable.
A supply of goods is the transfer of tangible property and the right to dispose of that tangible property as owner (Primary VAT directive Article 14 (1) / VAT Act 1994, Sch 4, 1). Architects work is intellectual property rather than tangible property - the paper you have is not worth x thousand pounds it's the idea's and specifications on it that are worth the money.
2nd Apr 2020
Exempt income is within the scope of VAT as it still relates to supplies made by a taxable person in the course or furtherance of business. Thus it falls under 'relevant supplies' for the Flat Rate legislation [S26B VAT Act 1994 - S3 further defines supply as well].
A grant is not consideration for any supply - you don't provide something in order to receive a grant (or at least nothing substantive maybe a report or two to prove you deserved it) if you provide something then it's a contract for work or of sale.
So Covid 19 grants are outside the scope of VAT, there's no supply and hence no application of the flat rate.
20th Mar 2020
Agree with doubletrouble the dereg limit is prospective if there are reasonable grounds for thinking you'll be below then you can deregister as soon as that fact is demonstrable.
16th Mar 2020
If it's from your insurer then I'd say no (depending on the terms of your policy though and whether this is actually insurance).
There's no supply between the insurer and you to be taxable in it's own right and in terms of the bad debt, presumably the debt itself remains unchanged - this isn't your insurer satisfying someone else's debt they are covering your loss but the original debt remains with you and is unsatisfied. If that's the case then you've still got a bad debt and if they paid you in the future presumably you'd have to pay the money back to your insurer.
Of course if this is actually a factoring arrangement rather than insurance then Bad Debt Relief isn't available so you'd have to pay it back or a suitable proportion of it depending on how much is recovered.
25th Feb 2020
I'm sorry I know from this forum that you're well versed enough to know that logic and VAT don't mix (unlike Nesquik and milk) so I have no idea why you'd even attempt to get some logic out of it.
For those looking for Alice style logic try: Cocoa is a product used as a food but in this form is not in itself confectionary so doesn't fall under the exclusion (or is it exception) for confectionary.
It could of course be excepted (or is it excluded) as a product for making a beverage, which is taxable (hence the Strawberry and Banana issue). However the fine coating that settles on the kitchen when my son bakes gives the lie to it being 'just' used for beverages, and so it is generally food.
Of course you could just add the milk and then sell the result, being a zero rated 'preparation of milk' rather than a 'beverage'.
Unless of course you sell it to drink in, in which case it's catering and excluded from being excepted, or something.
So all in all a most versatile ingredient, or food, or beverage, or milk product, or Uncle Tom Cobley and all.
See all very simple - I don't know how people possibly get confused over such things.
21st Feb 2020
"Operating company A generally recharges legal fees to its customers and bills them as disbursements, so the VAT is outside the scope but claims the VAT back."
I can't see the treatment being the same, I'd suggest that B adopt a correct treatment rather than the current one.
If they're billing as a disbursement (i.e. claiming that there is no supply to them and the supply is instead to the end customer) then where are they seeing a supply upon which they're entitled to recover VAT?
18th Feb 2020
If the work you're doing is Zero rated then Zero rate it if it's standard rated standard rate it. Whether you're part of any group, other than a VAT group, is irrelevant to the VAT charge.
Unfortunately you haven't given enough detail to say whether anything should be zero or standard, as all you've told us is there's some land and some building works, some being new build (of something but we don't know what: homes, hospital, speedway track, giant sculpture of an incontinent hedgehog), and some being refurb (again we don't know what (I'm keeping fingers crossed for the hedgehog)).
Depending on those factors depends on what you actually need to charge in terms of VAT.
I assume it's a very hush hush project since you've chosen to be anonymous when mentioning it, so it might be best to discuss it with your accountant who will presumably have all the details)
17th Feb 2020
The joy of adding up or fat fingers or something my example of course should be £720 not £780 as that doesn't split to 6 * £120 and isn't £600 + £120, and I can't be bothered to press the edit button.
17th Feb 2020
I may be dense and missing something here but I'm not seeing much of a cost apart from the reverse charge tax for the google expenses (and potential penalties and interest). As a side point I'm not sure how this is a 'voluntary' backdated registration if you've exceeded a statutory threshold but that's presumably just semantics and you mean 'unprompted' registration rather than voluntary.
Are a number of the suppliers not registered for VAT? If not then I'm not sure how this is impacting the bottom line (again) of the group.
Surely the original cost including VAT was booked by one company and then a gross recharge was booked to the others. Was the recharging party making a markup?
Otherwise I assume it goes A gets a charge for, say, £600 plus £120 VAT, the VAT is not recoverable so they have a charge for £780 which they share out for Co.s B to F at £120 each. Old World order gives a cost of £120 for each company hitting the bottom line.
New World Order: They have a cost of £600 plus £120 VAT, they're making an onward taxable supply of most of this and so can recover £100 of VAT, restrict the £20 attributable to their exempt activities and then charge their compatriots £100 plus £20 of VAT each, bottom line for B to F is £120 cost. Their bottom line has £100 still there and £20 of irrecoverable VAT. Net hit still £120 and still would be even if retrospectively accounting for VAT on the recharges that have already taken place as if doing it at cost the VAT they should have charged is the VAT they are now able to recover.
So all I can see resulting in a hit to the bottom line (apart from Google stuff) is if a) they used largely unregistered suppliers so now are the first taxable link in the chain, b) they're making a markup and so there's some 'profit' VAT to account for, or c) HMRC are arguing the nature of the costs changes i.e. exempt incoming rent is now a taxable operating licence or 'office services' or dreaded 'management charge' or something. But if this is a recharge of actual operating costs then I'd assume the recharges can be couched as following through the original nature of the charge and so VAT can flow through with little effect.
As I say apologies if I've missed something obvious in the OP that addresses this.
Also as to the tax point, then really that's just set by the tax point [email protected] first of supply, invoicing, or payment. So if all three of them or even just a couple are done and dusted then they'll be set in stone.
Other than that if there are even minimal external supplies then as DJKL suggest a VAT Group may be a get out although more difficult if you've already done the registration.
10th Feb 2020
I've no direct experience on this with YouTubers but I'd stick with the first rules of VAT - 'supply and consideration' and the links between them.
I'd have a look here: https://www.gov.uk/hmrc-internal-manuals/vat-supply-and-consideration/va... in the case of Mr Tolsma where the ECJ came to the opinion that playing music on the public highway did not create a full enough relationship between any 'supply' and any consideration.
I don't see that much difference between people donating for music on the public highway and people donating for some old twaddle on the information superhighway.
As you say (or at least I infer you to understand it) Patreon and similar platforms do set up a quid-pro-quo where you get something for your money be it an exclusive short story or an art card each month, if the money from YouTube is just because someone feels like it and they get nothing for it - then stick with Out of Scope no MOSS, No VAT. (Although you may have to convince HMRC as the idea of donations will confuse them no doubt).