Larking Gowen weekly digest
- HMRC’s new online tax forum and dedicated webchat service for small businesses and the self employed has been launched this week.
VAT and indirect taxes:
1. Practice Point – EC Sales Lists: The submission of these statistical returns are often overlooked, and as a consequence considerable penalties can be incurred by VAT registered businesses. Key points regarding these are:
- Returns have to be submitted when a UK VAT registered business makes supplies of goods or services to customers who are VAT registered in other EU states
- There is no minimum threshold for the making of the returns – which are due as soon as a single sale is made
- Returns are normally due monthly (even if the taxpayer is on quarterly returns), and are due by the 21st of the following month where filed electronically (14th of the month for paper returns)
- Whilst the return is purely for statistical purposes, fines of up to £15 per day per return can be levied by HMRC, up to a maximum of 100 days – if 10 returns are not filed, potentially, the tax payer could be fined £15,000!
If you are unsure over the filing of ECSL returns, please consult the Larking Gowen VAT team.
2. Brockenhurst College: Following on from the recent CJEU decision, HMRC have updated their internal manuals to include a change in their policy in respect of goods and services ‘closely related’ to education. The updated guidance gives three main criteria that must be satisfied in order for activities to be classed as ‘closely related’ to education, and therefore exempt from VAT:
- The education in question must be being provided by way of business.
- The activity in question must be student-led and ‘essential’ to their education.
- The activity must not have the purpose of generating additional income for the body in direct competition with commercial enterprises.
If you have any queries on the application of the above criteria then please contact the VAT Team
3. VAT on prefabricated buildings: A recent Upper Tribunal case has overturned a First Tier Tribunal decision, which was included in a previous Weekly Update in July 2016. The taxpayer hired out prefabricated temporary classrooms to a school and classed the supply as standard rated, however HMRC argued that the classrooms were fixed to the ground and therefore the supplies were of exempt ‘immovable property’. The Upper Tribunal has now sided with HMRC, and therefore the taxpayer must treat the hire as exempt.
4. VAT and care homes: HMRC have issued a new Brief 2 (2017) outlining their revised policy for the zero rating of new buildings intended for use as care homes following the decision in Pennine Care NHS Trust. The guidance outlines the differences between care homes, which are zero rated, and hospitals, which are standard rated.