VAT

From April 2019, any VAT registered business with taxable turnover above the registration threshold will be required to submit digital VAT records and make digital returns as part of HMRC’s Making Tax Digital format. Voluntary VAT registered businesses with turnover below the VAT registration threshold will not be required to take this new approach until […]

When a business changes entity, e.g. from a sole trader or partnership into a limited company, to what extent does the VAT status of the original entity affect the new one? The important point is whether the original entity was a taxable entity, this means that they were either already VAT registered or liable to […]

A business is either registered for VAT or not registered for VAT.  A business cannot have some activities registered and some not. Similarly, the VAT threshold (2017-18 £85,000) cannot be avoided by artificially splitting a business into separate parts and arguing each part is under the threshold. However it can be possible for two people […]

Currently in the UK most physical books are sold with 0% VAT and most e-books are sold with 20% VAT.   Until Brexit has actually completed, the UK remains part of the EU wide VAT system.  It is therefore of interest that MEPs are to vote on a EU Commission proposal to reduce the rate of […]

It was announced in the Autumn Statement that from 1st April 2017, “businesses with limited costs, such as many labour-only businesses” will have their VAT flat rate percentage increased to 16.5%. HMRC refers to such businesses as “a limited cost traders”. For such businesses this will remove the benefit of being on the Flat Rate […]

If any of your customers are non-business and based outside of the UK then you have to charge their countries VAT on any electronically supplied services.  This can include anything you provide which they access from the internet (information etc).  This means that you will be responsible for accounting for VAT in each EU customer’s […]

If you supply goods or services to businesses outside of the UK you need to consider carefully your UK VAT position.  We have a factsheet VAT on International Transactions and would be happy to have a further discussion on this (contact us here). But having sorted out the UK situation, that is not the end […]

There is a general rule barring VAT claims for input tax relating to cars.  However two recent cases have highlighted that a company can in certain circumstances claim back VAT input tax on cars bought and used solely in the business.  This will be unusual and will be very much the exception to the rule. […]

Default surcharges are penalties raised by HMRC mainly in relation to late VAT returns and payments.  These are raised by computer automatically based on facts.  When a real life HMRC officer gets involved and hears a traders case, more than half surcharges reviewed are cancelled.  If you receive any penalty, or indeed any letters from […]

A recent tax case (Longridge on Thames v CRC) concluded that a charity providing training services for a fee was trading for VAT purposes. The Court of Appeal said that the charge made by the charity for the training “was more than nominal in amount and was directly relate to the cost of the activity […]

Advisory Fuel Rates from 1 September 2016 When calculating the VAT element of mileage payments, these rates apply from 1 March 2016. You can use the previous rates for up to 1 month from the date the new rates apply. Engine size Petrol – amount per mile LPG – amount per mile 1400cc or less […]

VAT on costs can only be claimed in so far as the costs are attributable to taxable supplies.  A recent tax case highlighted the need to apportion input tax claims on business overheads where significant income is exempt or outside the scope of VAT. To discuss any aspect of VAT further please book a chat […]

A recent case has reminded of the need to have proper purchase invoices in order to support VAT input tax claims.  In P Brookes v CRC, Upper Tribunal (Tax and Chancery Chamber), 6 April 2016 the taxpayer had claimed input tax on costs for which he had no purchase invoices.   The taxpayer then belatedly obtained […]

In a recent case (Airtours Holidays Transport Ltd v CRC, Supreme Court, 11 May 2016) Airtours had paid for services provided by PwC of financial reports that would be used by financial institutions to assess lending to Airtours.  Airtours paid PwC fees which included VAT, and went on to claim the VAT as input tax.  HMRC […]

Don’t forget that if you have made any EC sales during the quarter ended 31 March 2016 that you need to report these to HMRC on an EC Sales List (ECSL).   You can submit your ECSL through HMRC Online Services here, it is possible that you may need to enrol for the service if […]

The VAT registration thresholds increase by £1000 from 1 April: Registration threshold from 1 April 2016 = £83,000 (based on past 12 months or next 30 days) De-registration threshold from 1 April 2016 = £81,000 (based on expected turnover next 12 months) All figures are in our tax rates table. David Wilsdon

A recent First-tier tribunal has upheld HMRC’s position that a trader cannot ask to be de-registered from VAT from an earlier date. If you find you may be better off de-registering from VAT (usually because some or all of your customers cannot reclaim VAT) and you are below the VAT de-registration threshold (currently £80,000) then […]

Remember that a business registering for the flat rate scheme for VAT is eligible for a 1% reduction from their normal rate for the first 12 months. Get in touch with us if you prepare your VAT returns yourself and would like some further information.

Choosing a flat rate scheme category Deciding on the category for “business activity” when registering for the flat rate scheme can prove tricky. One general approach to take is to consider how the business activity would be described to a person on meeting them for the first time using everyday words where possible, such as […]

A recent VAT tribunal case illustrates how important it is to take proper advice on a business sale. The Ryford Arms was sold by Pontardawe Inn Limited. The purchaser of the premises and goodwill of the Ryford Arms was a company known as Claden Limited; However the fixtures, fittings and equipment were acquired by the […]