A recent study has found that more than a quarter of people who build their own homes are failing to reclaim the VAT on their building materials and could be owed as much as £30,000. Read More
HM Revenue & Customs’ (HMRC) VAT policy on new build student accommodation has been challenged successfully in a First Tier Tribunal (FTT), meaning that contractors should no longer be required to pay 20 per cent VAT on subcontractors’ services on new build student accommodation. Read More
HM Revenue & Customs (HMRC) has recently released guidance on a change to VAT rules to telecoms services, known as ‘roaming’, used outside the European Union by UK customers.
The changes, announced in this year’s Budget, will affect suppliers of mobile telecommunications services, private consumers and non-business users who consume telecommunication services outside the EU. It will be brought in on 1 November 2017.
At the moment, UK VAT is charged when UK consumers use their mobile phones within the EU, including while in the UK. However, because of the “use and enjoyment” rule, VAT is not charged when they use them outside the EU.
However, the new measure will bring the UK treatment of these services in line with internationally agreed guidelines, and will mean that UK VAT will be charged on roaming services used by UK consumers outside the EU.
The agreed approach internationally is to tax mobile phones in the country where the user of the phone lives. According to HMRC, this means that the “use and enjoyment” rule is no longer necessary and may result in double taxation. The UK already adopts this new approach for use in the EU.
Without the use and enjoyment rules, firms could have located themselves outside the EU to benefit from being in a jurisdiction which did not apply VAT to exported services, which would potentially have resulted in people living in the UK not being charged VAT on their mobile phone use in the UK.
It is thought that the move will make the Treasury £45 million in 2017-18 and £65 million per year going forward.
HM Revenue & Customs (HMRC) has confirmed that it has accepted the consequences of a European court judgment that exempts college facilities that do not earn income from VAT. Read More
eBay traders will be forced to pay VAT on all purchases under new corporate structure rules to be launched later this year. Read More
Prime Minister Theresa May has insisted that the Conservative Government will not increase VAT for the next five years if the party wins the upcoming General Election on 8 June. Read More
HM Revenue & Customs (HMRC) collected £3.3bn in underpaid VAT from SMEs and wealthy individuals over the past 12 months, suggesting this sector is coming under increasing scrutiny. Read More
Important changes to the VAT Flat Rate Scheme were phased in on 1 April 2017, and could have far-reaching implications for small and medium-sized enterprises (SMEs).
Many small business users of the Scheme who have low costs will see the rate they pay drastically increase under the reforms.
The VAT Flat Rate Scheme was originally created to simplify businesses’ record keeping, by making it easier for smaller companies to figure out their bills.
VAT is usually calculated via a two stage process, where VAT-registered businesses are required to deduct the VAT on their inputs, from their outputs.
In comparison, the Flat Rate Scheme used a simplified single step process, whereby they only paid VAT on the sale at a rate determined by their business’ type.
However, HM Revenue & Customs (HMRC) noted that the scheme led to some businesses effectively paying less or more than they would do under the ‘typical’ two stage VAT regime.
HMRC has been aware of this inconsistency for some time and has long suspected some businesses of using the rules to their advantage.
With this in mind, the Government has now introduced changes to the Scheme, which will see the rate of low cost businesses, referred to as ‘limited cost traders’, increase.
‘Limited cost traders’ can still use the Scheme, but their percentage will increase to 16.5 per cent. This means that if they sell £240 of work, including £40 of VAT, the flat rate amount payable is £39.60 or £240 x 16.5 per cent.
Under the new rules, Businesses that spend less than two per cent of their sales on goods (not services) in an accounting period are now automatically considered ‘limited cost traders’, as are those who spend less than £1,000 a year on goods – even if this is more than two per cent of the firm’s turnover.
When working out the amount spent on goods, this cannot include purchases of capital goods, food and drink, vehicles, or parts for vehicles.
IT contractors, consultants, hairdressers and accountancy firms, which heavily rely on labour, with very little other costs, are most likely to be affected.
Whilst construction workers who supply their labour, but are provided with their raw materials by a main contractor, are also likely to be hit hard by the new changes.
Boots has finally begun to refund customers who were charged VAT when they bought goods in the store’s airport outlets following a revelation back in 2015, when airline passengers found they had been overcharged. Read More
Exactly a week after he announced a rise in National Insurance Contributions (NICs) for the self-employed in his Spring Budget, Chancellor Philip Hammond has made a dramatic U-turn and said the plan will be scrapped. Read More