HM Revenue & Customs is changing its bank account for payment of tax but is introducing the changes over a period of time. The first change came into effect on 6 April 2009 but does not affect payments of VAT.

HMRC has a web page detailing how and when to pay each of the taxes it collects.
 

HMRC has announced changes to the Standard Partial Exemption Method that will come into effect for all VAT returns starting after 1 April 2009. These changes will affect everyone who is partly exempt but, for most, will be optional. The changes are:

• In-year provisional recovery rate - The option to use the previous year's annual recovery percentage for the following 4 VAT returns to avoid the need to complete a partial exemption calculation each quarter.
• Early annual adjustment - The option to include any adjustment required on the final return of the partial exemption year (the March, April or May return) instead of the following one.
• Use-based option for new partly exempt businesses - The optional use of a non-income based method to recover VAT for new businesses and newly partly exempt businesses where current income does not yet reflect intended use.
• Widening the scope of the standard method - Not optional but will mainly affect business making exempt supplies to overseas customers.

The first returns to be affected by the change will be 04/08 returns for those on monthly periods or 06/08 for those on quarterly periods.
 

Following a recent ECJ case involving 2 large pharmaceutical companies, an opportunity has arisen to recover VAT on the cost of entertaining overseas Clients in the UK.
 

HMRC has issued a Business Brief in which it states that repayments of VAT and any interest received are subject to corporation tax. However, there is some disagreement amongst senior tax advisors and it is recommended, if this issue is significant, you should seek confirmation of the position from your BTG Tax Consultant.
 

As announced in the last budget, the time limit for correcting errors on VAT returns, for both HMRC and VAT registered businesses, is being extended from 3 years to 4 years.

The change is to be phased in over the next year. The time limit will extended during the year so that no period ending before 1 April 2006 is will be brought within the limit.
 

HMRC has withdrawn the Extra Statutory Concession (ESC 3.5) that expressed its view on when it was bound by incorrect advice given by its officers.

New guidance is published on HMRC's website. However, this guidance is not an exact replacement for the withdrawn ESC. If you feel you have been mislead, either explicitly or implicitly, please contact your BTG Tax Consultants.
 

A Court Case involving Boots Plc and a Tribunal Case involving the operator of Hoar Cross Hall has resulted in different outcomes for businesses operating voucher based promotional schemes. In one, the Court ruled that the business need only account for VAT on the amount received minus the value of the voucher. In the other that VAT should be declared on the full amount received regardless of the issue of a voucher.

These different results show how important it is to ensure any such promotional scheme is implemented correctly. BTG Tax consultants can assist with such work.
 

The Chancellor, Alistair Darling, will present his 2009 Budget on 22 April 2009. As always, BTG VATease will issue email guidance on the VAT changes announced on the evening of the Budget ready for your use on the following day.
 

From 1 April 2009 the tax appeals system is changing to bring VAT and direct taxes together into a new Tax Appeals Tribunal.

Some appeals will be heard on paper only, others may be raised automatically to the Upper Tribunal, which will hear complex cases and appeals from the Lower Tribunal.

One major change from the old VAT system is the inability to recover costs incurred in the Tribunal process, which may, for many businesses, affect the decision to pursue an appeal in the first place.
 

With the VAT rate set to increase from 15% to 17.5% on 1 January 2010, the Govt. has introduced legislation to stop businesses from anticipating the change by pre-invoicing for supplies that are actually to be supplied after the increase.

These measures should only affect supplies made to customers who cannot recover all of the VAT it incurs where:

• the supplier and customer are connected;
• the payment is financed by the supplier (or someone connected to them); or
• the supplier does not require payment until at least six months after the invoice.

HMRC believes the measure's affects will be restricted so as not to affect normal commercial transactions. However, such statements by HMRC have been proven incorrect in the past. If you have any transactions spanning the rate change that you think may be caught by the measure you should ensure they are reviewed by a specialist.
 

Barry Stocks
Director, VAT & Indirect Taxes
T: 0161 837 1876
E: barry.stocks@btg-tax.com

Mike Marsden
VAT Senior Manager
T: 0161 837 1880
E: mike.marsden@btg-tax.com

Tony Jackson
Director of VAT Services
T: 0121 452 1515
E: tony.jackson@btg-tax.com

Simone Hurst
Director of VAT Services
T: 0121 452 1515
E: simone.hurst@btg-tax.com

Paul Taylor
VAT Manager
T: 0121 452 1515
E: paul.taylor@btg-tax.com

Helen Benussi
Senior VAT Consultant
T: 0121 452 1515
E: helen.benussi@btg-tax.com

Jaysson Palmer
VAT Partner
T: 020 7024 8370
E: jaysson.palmer@btg-tax.com

Mark Chesham
Director of VAT Services & IPT
T: 0117 937 7138
E: mark.chesham@btg-tax.com