VAT Newsletter November 2003

Customs have published on their website a Q&A document relating to the recent postal dispute and timely submission of VAT returns / payments.

They state that VAT returns and payments which are delayed by localised postal disputes will be viewed sympathetically and that there will be no liability to surcharge where the current postal dispute has been the cause of the delayed payment.

However, they also state that if businesses do not receive payments from their customers because cheques are delayed in the post then the businesses must still account for VAT at the normal time.

Full details can be accessed at: www.hmce.gov.uk/business/vat/postal-dispute-qa.htm

Have Customs and Excise changed its policy on how they deal with the above? It appears that they may have. An appeal that was lodged recently, apparently with a request for a local reconsideration, has been met with a Statement of Case from Customs and Excise. There was no indication that the matter received any form of local reconsideration.

Customs have released on their website JVCC information sheet 06/03 entitled New Regulatory Regime for High Value Dealers (HVD's), which outlines the money laundering control regime for which Customs have taken responsibility.

HVD's are defined as businesses who deal in goods and who accept, or are prepared to accept payment in any currency for a single transaction equivalent to EUR 15000. The information sheet can be accessed at: www.hmce.gov.uk/forms/notices/jvcc0603.htm

Customs have taken the opportunity to publish the fact that they have arrested two people thought to be involved in an £80 million money laundering case. This money is thought to be the proceeds of a VAT fraud operation under the missing trader scheme involving mobile phones and computer chips.

Due to reduced costs and increased functionality EPOS has become progressively more popular. Customs have now published an extensive guidance paper (information sheet 11/03 dated August 2003) setting out what such a system should be capable of in order to meet the VAT requirements. This guidance may also be relevant for wholesalers operating EPOS and software designers developing the respective software.

Customs made an error when they first notified businesses of the change of address to which option to tax notifications should be sent. The correct address is:

Option to Tax National Unit
HM Customs and Excise
Portcullis House
21 India Street
Glasgow
G2 4PZ

Customs and Excise have recently released Business Brief 20/2003 dated 23 October 2003. The last part of this gives guidance in connection with the above.

Generally, it is Customs view that in most cases books or magazines which are packaged together with another item are likely to represent a multiple supply of the two elements. However, in the following circumstances there is likely to be a single composite supply: -

1. Children's books packaged with a tape or CD where there is an audible interaction between the operation of the tape/CD and the book would be a single zero rated supply
2. Educational books with a tape or CD where there is a clear interaction between the book and tape/CD would be a single zero rated supply
3. An educational tape / CD incorporating a booklet where the booklet is simply an instructional manual explaining how to use the tape/CD would be a single standard rated supply.

From 1 October 2003, all business gifts, whether single or multiple made to the same person will be relieved from VAT where the total cost of the gifts does not exceed £50 during any rolling 12 month period. For ease of record keeping, businesses may adopt other defined 12-month periods, such as their annual accounting period, tax or calendar year.

When traders make their first claim in another Member State, they must include a certificate from their own tax authority showing that they are registered for VAT. Such requests should not be made to the traders Local VAT Office's, but to the:

National Registration Service
VAT 66 Section
Deansgate
62-70 Tettenhall Road
Wolverhampton
WV1 4TZ.