Construction Businesses

Are you reverse VAT ready?

Did you know that if you are part of a construction supply chain and you buy labour and materials as part of your day-to-day activities, then you may have to pay VAT on all material purchases whilst not receiving any payments to you until you complete a VAT return?

As from 1 October 2019, you will now need to be fully aware of the impact that this new legislation will have on your business as it could severely affect your cash flow and working capital.

How we can help

With almost 30 years of experience and specialists working in this field, VATease can help you to navigate this changing environment in order to ensure that you are charging VAT correctly and not falling foul of this new legislation. We can also help you to understand where you can make VAT savings on each project but, it is essential that we work with you from the beginning of a project as often, changes are difficult to implement once a project is underway.

Why take our advice?

When taking the advice you are showing that you are exercising Reasonable Care in your tax affairs which is very important to HMRC should there be an error in your reporting. Such care could lead to a much-reduced penalty should something go wrong. The current penalty regime for errors is all about actions and behaviours or as HMRC like to call it ‘taking care of the tax’ so if you can show that you have taken advice then this could go in your favour.

In addition, if you provide VAT training for your employees this again is a fantastic example of exercising Reasonable Care. Again, we can help with bespoke courses created just for your business and employees.

Why Work with us

There are free tax and VAT helplines out there including HMRC’s own National Advice Service, but we go that extra mile to ensure we have covered all aspects of the query, whilst considering the practicalities. We have a reputation to uphold for VAT advice is what we do and we do it with a smile and integrity. Additionally, we will speak to a Client on your behalf if you need us to – it’s all part of our professional and personal service.

HMRC

A few things to remember if you go directly to the National Helpline Service for a VAT query:

HMRC will request a reference from you and if you are VAT registered, this reference is your VAT Registration number. Your query is then logged against your file. It has been known for a visiting VAT Inspector to look at the queries asked by a business of the HMRC helpline to try and determine whether there is an area that appears to be causing difficulties. At the visit, the Inspector may then focus on that area to see if there is an under declaration of VAT because of misunderstanding the rules. Also, generally, HMRC will only talk to the persons specifically named on their records, so if your name’s not down – you’re not coming in!

HMRC will NOT advise on a hypothetical situation, so you cannot have a general VAT chat about your affairs and what you are planning to do.

If you rely on advice given by HMRC which is later proved wrong, then it is down to you to be able to prove that you gave HMRC the full facts of your query in the first place so that you can rely on the advice they gave you!

HMRC are quick to point out that VAT is a ‘self-assessed tax’ so, unfortunately, it can be difficult to get advice from them.

When it’s OK to go to HMRC…

Of course, there may be some occasions when an approach to HMRC (to the written enquiries) on a VAT issue is the best way forward and we will advise you of these times and guide you accordingly.

However, we do not recommend blindly sending in a written VAT query for a couple of reasons.

We were once asked to act for a charity who wanted to maximise their grant income after they had sent a perfectly innocent letter to HMRC VAT Enquiry centre asking for guidance as to how they should structure their affairs to achieve the best VAT saving. Next thing, the local Tax Avoidance Officer became involved accusing the charity of illegally trying to avoid paying the VAT due when all the charity wanted was some advice to plan things in the most VAT efficient way. No law against that!

HMRC tend to reject a lot of VAT queries because VAT is a self-assessed tax and they state it is up to you as the taxpayer to make the decision about your VAT liabilities. Additionally, they will often simply state that they will not answer your VAT query because your question is covered in their public guidance. They then refer you to the relevant Public Notice. Therefore, in order to get any VAT advice in writing, you must word your enquiry letter carefully so as to pre-empt HMRC’s stock responses. If you receive some written VAT advice from HMRC, remember you still need to be able to prove you gave full (and correct) facts in order to rely on this VAT advice.

Simply send us a one-off query for as little as £35 or, if you would like us to assist you more extensively – we’re here to help. What’s more, we pride ourselves on being jargon-free and also offer transparent pricing.

More information

Simply send us a one-off query for as little as £35 or, if you would like us to assist you more extensively – we’re here to help. What’s more, we pride ourselves on being jargon-free and also offer transparent pricing.

Contact us today for a friendly chat.