It's been a comparatively quiet month for VAT developments in September unless you are
involved in trading mobile phones or computer chips. There has been an
announcement by HM Revenue & Customs that will be of interest to publicans
and their accountants though.
HMRC to give "Helping Hand" to Pubs
HM Revenue & Customs have publicly trumpeted their plans to give a
helping hand to public houses. This helping hand includes a letter to 30,000
publicans pointing out common errors and problems and a program of visits, some
of which will be unannounced. This has the appearance of HMRC trying to dress up
yet another revenue generating exercise as "assisting" businesses.
European "One-Stop Shop"
Proposals for a "One-Stop Shop", a single point of VAT registration for
traders making supplies across the EU, are one step further forward with their
approval by the European Parliament. Together with proposals to simplify EU VAT
by:
- reducing the language burden on business; providing clear time limits;
the storage of documents and records; the currency to be used when making
payments; thresholds; and the possibility in the future of excluding small and
medium sized enterprises' exchange rate losses.
Missing Trader Fraud - HM Revenue & Customs' Conduct
In a recent Tribunal case, regarding a carousel fraud, the Tribunal Chairman
severely criticised the conduct of HMRC. HMRC are disallowing input tax claimed
by companies who purchase goods, usually mobile phones, where those goods have
been used to perpetrate a missing trader fraud; even where HMRC acknowledge that
the company who is being assessed had no knowledge of or part in the fraud.
Following a Tribunal Case in which it was decided that HMRC had not
sufficient proof that goods purchased by a company had been part of a fraud the
Chairman referred to 'an untrue statement as the basis of an application to
these tribunals to vary a direction with which, when the application was made,
they could not possibly have complied'. He said "it is essential that these
tribunals, including the supporting administrative staff, be able to rely on the
word of those representing Customs in all matters concerned with taxpayers'
appeals. If they cannot do so, and that would now appear to be in doubt, it
bodes ill for the future professional relationship between Customs and the
tribunals".
Mobile Phone Dealers - VAT Registration
In a case linked with missing trader fraud, a company intending to deal in
mobile phones has won its appeal against HM Revenue & Customs' refusal to grant
registration. Due to the restriction placed on mobile phone dealers most
existing companies will not trade with anyone not already VAT registered.
However, HMRC are refusing to accept intending traders' evidence of intention to
trade and will not register them until they start trading. The Tribunal accepted
the company's evidence and said that HMRC had no discretion in registering the
company.
VAT on purchase of Road Fuel and Fuel Scale Charge
Another Tribunal case challenges HM Revenue & Customs' traditional approach
to claiming VAT on fuel. A taxpayer proved that all fuel purchased by the
business had been used for a business purpose and that the taxpayer was not
therefore required to account for a Fuel Scale Charge. The Tribunal also noted
that, despite there not being any actual private use, because the car had been
available for private use input VAT could not be claimed on the purchase of the
car.
On the subject of road fuel, many of you may be aware that the European
Commission has instructed HMRC that the practice of allowing taxpayers to
reclaim VAT on road fuel purchased by employees must stop. HMRC has still not
published any guidance as to when this may occur or what, if any, alternative
arrangements may be adopted. It is thought possible that the change will happen
from 1 January 2006.
Massage Parlours
2 massage parlours have been to VAT Tribunal recently. In one the parlour was
deemed to be the principle and employer of the masseurs and responsible for
accounting for VAT on the whole if the income. In the second, the parlour was
required to account for VAT the "room rental" charged to the masseurs as it was
deemed to be a lease of facilities.
Tax Consultants - The root of all evil
A recent
article in the Guardian casts accountants, particularly tax consultants, as
the enemy of the state because of their tax avoidance advice. Written by the
Professor of Accounting from University of Essex, the article states, "Unless
stopped, the tax avoidance industry will destroy nation states and the very i
dea of democracy."
ACCA Seminars
VATease's Simone Hurst looks forward to seeing those recipients of the
newsletter who are ACCA members at one of the seminars she is doing a
presentation at over the next few months. Please be sure to say "Hi!" and let
her know what you think of the newsletter.
If you require further information please contact us on 0121 778 4299.
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