The VAT Weblog

An opportunity has arisen for suppliers of livery services to recover VAT they may have overcharged prior to December 1997.

If suppliers of such services feel they may have charged VAT to their customers before 1997 they should contact VATease to discuss the possibility of reclaiming the VAT from HM Revenue & Customs.

VATease has published its October 2007 VAT newsletter. It is available online via the VATease website.

October’s VATease Monthly VAT Newsletter is a long one. It covers changes to invoices regulations, ToGC rules, registration & deregistration offices and Lennartz Accounting for non-business use of assets.

VATease has published its July 2007 VAT newsletter. It is available online via the VATease website.

This months VATaBox Newsletter includes information on paying VAT by BACS or CHAPS, MOT charges and supplies by Lap Dancers.

VATease has issued a VAT newsflash this week highlighting the opportunity for many VAT registered businesses to submit claims for VAT overpaid or underclaimed in periods prior to April 1997.

In the Business Brief HMRC invites claims for VAT overpaid or underclaimed for periods up to December 1996 (for output VAT overpaid or amounts improperly paid as VAT) and April 1997 (for input VAT unclaimed). Claims should be made with an accompanying claim for simple interest.

Any businesses making such a claim must undertake to repay the money paid with interest if the House of Lords should overturn the ruling. Alternatively, businesses can wait until litigation has ceased before making claims.

When you fly (or sail) back into the UK from an overseas trip, one of the first sights that greets you is the Customs “Something to Declare” and “Nothing to Declare” lane choice. Most will walk straight through the “Nothing to Declare” lane without a thought but with limits set at a relatively low value, a very many people should be paying VAT and Duty on purchases they have made abroad.

Keira Knightley has recently found to her cost that the UK Tax Authorities require UK VAT and Duty to be paid on all goods brought back from overseas if the total value exceeds just £145. The Sunday Mail reports Keira was required to pay over £1,000 on items she was given for free at a charity event in the US.

A guide to what travellers should consider when returning to the UK can be found on HMRC’s website.

A press release issued by HMRC yesterday and picked up by most UK news outlets details the largest operation ever undertaken by HMRC to target criminals perpetrating missing trader and carousel frauds.

22 people have today been detained across the UK in HM Revenue & Customs (HMRC)’s biggest ever operation targeting multi-million pound VAT frauds. The detentions are linked to suspected carousel fraud, a sophisticated organised criminal attack on the EU VAT system involving large scale, contrived and complex trading activity across and beyond the EU.

Over 400 HMRC criminal investigators, supported by 100 officers from Strathclyde Police, Greater Manchester Police and the Metropolitan Police Service, executed over 60 search warrants nationwide at business and domestic addresses in the early hours of this morning.

These figures demonstrate the difficulties HMRC is facing in tackling the problem of VAT fraud. Unofficial estimates place the number of people perpetrating the fraud in the region of 9,000. If these series of raids required 500 people to arrest just 22 suspects HMRC would require a staff of of 200,000 officers to tackle the problem in full.

Incidentally, a similar raid back in 2002 resulted in the arrest of 22 people at a time when the total number of staff dedicated to tackling the problem of missing trader fraud was less than the number of officers deployed in a single raid yesterday.

Computing.co.uk reports rumours that the levels of missing trader and carousel fraud has doubled during the period April to June 2006.

According to figures released last week by the Office for National Statistics (ONS), the UK government has missed out on reclaiming VAT from an estimated £10bn worth of fraudulent exports in the second quarter of 2006, compared with £6.5bn in Q1. Last year the Q2 figure stood at £2.3bn.

Many legitimate dealers in mobile phones who are due money back from HMRC have had repayments withheld since April 2006 with little or no explanation. Some have expressed the opinion that HMRC, unable to tackle fraudsters directly, are targeting legitimate traders with strong arm tactics.

The Evening Times has an article reminding those who are about to build or convert their own houses of the DIY Builders’ Scheme.

Most people are unaware of the DIY VAT scheme which means house builders can claim back the lion’s share of their VAT.

One of the most common questions we get asked here at VATease is whether VAT must be charged on expenses. Here’s a typical question received via our query form and our answer.

> Sent: 09 August 2006 09:34
> Subject: VAT Question Submitted from VATease.co.uk
>
> The following was submitted on August 9th, 2006 at 09:34AM (BST).
> Subject: VAT Question Submitted from VATease.co.uk
> question: Our clients are VAT registered limited company
> contractors and they often re-bill expenses e.g. travel,
> hotels etc to their customers. Do they need to charge VAT on
> these expenses?

Unless it is a genuine disbursement, a recharge of expenses is not a separate supply to the main supply. It is, instead, a way of calculating the price charged for the main supply. The liability of the expenses recharge will therefore follow the liability of the main supply. If your clients are supplying standard rated goods or services then VAT must be added to the expenses.

Disbursements are costs incurred directly as agents of the customer. Input VAT cannot be reclaimed on them and they must be shown separately on the invoice. They can be invoiced without VAT. This is only usually applicable to items such as land search fees and MOT fees. Travel and subsistence costs cannot be treated as disbursements.

I hope that helps.

Please accept this advice as a free example of the services VATease can provide. If you would like further advice on this other matters you can engage VATease to provide VAT advice services. If you require I can send out a letter of engagement. This does not oblige you to use our services but will give a basis on which we can work if you do. VATease charges for its services on the basis of time spent at a rate of £125 per hour calculated in 6 minute intervals plus VAT and expenses.

Regards

Paul Taylor
http://www.vatease.co.uk/

Times Online reports that the Advocate General’s opinion in the 3G VAT case is due to be issued on 7 September.

The operators argue that the £22.5 billion that they spent in total on 3G licences in 2000 included VAT. Since most businesses can deduct the VAT that they pay from the VAT that they charge customers, they should be eligible for a repayment, they argue. The Government says that it auctioned the licences in its role as a public body and so the auction was not within the scope of VAT.