VAT

VQOTW: QUALIFYING CARS

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My client purchased a car for use in her business, which the dealer said was a qualifying car. My client took this to mean that she can recover the VAT but I disagree. Obviously my view has not gone down well with the client, but am I correct?

VQOTW: PROPERTIES ON HAND AT DEREGISTRATION

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One of my clients deregistered recently and has now received a letter from HMRC asking about a property that he bought four years ago for £150,000 and opted to tax. Although there was no VAT chargeable on the purchase, the property was empty at the time and in quite a poor condition as the seller was reluctant to spend money on it, so my client also spent £100,000 doing it up ready to let out. He opted to tax so that he would be able to recover the VAT on this refurbishment, and until deregistering has charged VAT on the rent. What does he need to do? As he has already cancelled his registration is he going to receive a huge assessment? The property is now worth around £300,000.

THE NUMEROUS QUIRKS AND FOIBLES OF VAT

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Are Jaffa Cakes biscuits or, as the name implies, cakes?
This question is one of the most famous examples of the kind of debate that happens frequently in the world of VAT because precise definitions can make the difference between sink or swim for businesses that sell the products under discussion.

VQOTW: ENERGY SAVING MATERIALS

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My client is planning major renovations to her home to make it more “eco-friendly”. This will involve the installation of a number of energy-saving materials such as solar panels, insulation, and an air source pump to provide both heating and cooling functions. However, she has heard there are imminent changes to the VAT treatment of such supplies and is concerned she may miss out on current VAT reliefs. Please could you clarify?

VQOTW: REVERSE CHARGE SERVICES FROM OVERSEAS

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My client is an insurance company, they are VAT registered and partially exempt (85% exempt/15% taxable). They have invested £200,000 in bespoke computer software. The software was written for them by an Israeli company, who are renowned leaders in software security. HMRC have recently inspected the insurance business and made an assessment of £34,000. My client is confused as to how they have a VAT assessment on an invoice that didn’t even have any VAT on it.

VQOTW: CULTURAL ADMISSIONS

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My client is an amateur dramatic society operating via a company limited by guarantee. They own their own premises and charge admissions to their productions. The admissions have grown to £80,000 in the last 12 months, and alongside this income, they have £20,000 from bar sales and they also occasionally perform at other theatres. They don’t control the box office for these performances at other theatres; instead, they are paid a fixed fee by the theatre for performing, and income from this is £10,000. As their total sales are now £110,000 for the last 12 months, I’m assuming they have to register for VAT?

VQOTW: DOMESTIC REVERSE CHARGES

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I have recently been reading up about the domestic reverse charge for construction services which comes in in October 2019, including the helpful VQOTW (14 June 2019), but this has got me wondering whether there are any other reverse charges in the UK I should be aware of, and why they are increasingly being used by HMRC?

CONSTRUCTION INDUSTRY SCHEME

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And upcoming changes for reverse charge VAT.
Few sectors have such an impact in the UK as the construction industry. It not only provides the fabric of our nation – the places where we live and work – but also underpins our entire economy.

VQOTW: DISTANCE SELLING IN THE EU

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My client is a small retailer specialising in bespoke leather goods, and all sales to date have been within the UK. In order to expand her customer base, she is launching a website and planning to sell through Amazon. Are there any VAT consequences she needs to consider?

VQOTW: DISTANCE SELLING IN THE EU

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My client is a small retailer specialising in bespoke leather goods, and all sales to date have been within the UK. In order to expand her customer base, she is launching a website and planning to sell through Amazon. Are there any VAT consequences she needs to consider?

VQOTW: DEREGISTERING WHERE THE TRADING PREMISES HAS BEEN OPTED UNNECESSARILY

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My client is a small independent retailer selling mobile phones and accessories, with turnover below the VAT registration threshold. Last year, in September 2018, they bought the premises they were occupying from their landlord. The landlord had opted to tax and the purchase price was £100,000 plus VAT. In order to recover the VAT, the client VAT registered and notified their own option to tax. The client’s turnover has remained below the threshold, and they have asked me whether they can deregister, and what the consequences of that would be.

VQOTW: PRIVATE TUITION

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My client is a Limited Company and runs a swim school, teaching children. The client’s turnover is close to £85,000. I would like to confirm that my client is making exempt supplies of education and therefore does not need to VAT register.

VQOTW: HOME OFFICE

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My client is the director of an interior design company. The company rents a small unit for storing stock, but this space is not really suitable for use as an office. She is exploring the possibility of having a home-office erected in her garden. Could you please advise on the VAT recoverability of such a project?

VQOTW: FLAT RATE PRE-REGISTRATION VAT

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My client is about to register for VAT and wants to use the flat rate scheme as she meets the conditions and it would be beneficial to her. However, her intention is to register for normal VAT initially, in order to recover pre-registration input tax, and then after the first return has been filed, switch to the flat rate scheme. Is this acceptable or will HMRC challenge it?

VQOTW: MTD AND CASH ACCOUNTING

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My client is a wedding and party planner, and is compulsorily VAT registered operating the cash accounting scheme. Their current system is not particularly sophisticated and they only operate using a manual cashbook. I am in the process of ensuring they are MTD compliant for their 07/19 return, but want to keep things as simple as possible for them. Can they continue to operate a cashbook in a spreadsheet format and submit via bridging software?

VQOTW: 28 DAY RULE

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My client runs a small bed and breakfast and a furnished apartment which to date has been let on an Airbnb basis with a daily linen change and cleaning service. Normally she would account for VAT on all of these stays. Now she has received an enquiry from a construction company about exclusive use of both for a period of 12 months to house some of its employees working away from home. Should she still charge VAT?

VQOTW: INPUT TAX ON RE-REGISTERING FOR VAT

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My client is a bathroom fitter and was VAT registered from January 2017 to March 2018 as he had a contract with a large developer to fit en-suites into new-build dwellings. His supplies were mostly zero-rated and he received repayments of VAT from HMRC. He bought a new commercial vehicle and specialist tooling in August 2016 on which he recovered the VAT as pre-registration input tax. On his final return, for the tax period ending 31st March 2018, he accounted for VAT on all the assets and stock on hand as a deemed supply.

Registering For Making Tax Digital For VAT

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The moment has come: if your business has a taxable turnover above the VAT-registration threshold, which is currently £85,000, you’re now obliged to keep records in digital form and to file your VAT returns using HMRC-approved software.

VQOTW: BUILDING MATERIALS

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My client is a builders’ merchant and has supplied steel sheets to a customer who is building his own home. The customer has provided my client with a copy of the planning consent supporting the demolition of an existing property and the construction of a new dwelling. Can my client zero-rate the supply of the steel?

VQOTW: CHARITY FUNDRAISING

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Over the last few years, my client and a couple of his friends have run a small local beer and cider festival; any profits they make are given to local charities. They sell a few tickets in advance and have sponsorship/advertising income, but most sales occur on the day of the event. In the last few years, they have been below the VAT registration threshold, but with the number of people attending increasing year on year and the wonderful summer we had in 2018, they did exceed the VAT registration threshold by £800. As all the profits are donated to charity, can the client benefit from the charity fundraising exemption?

VQOTW: ONLINE TRADERS SELLING TO GERMANY USING AMAZON

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My client is an online retailer, selling through Amazon and other online marketplaces. They have recently received correspondence from Amazon with regard to the online sales they make to customers in Germany. It appears that Amazon is insisting that my client must VAT register in Germany if they want to continue to sell to German customers via Amazon. Can you advise what has prompted this action?

VQOTW: CHANGE IN POLICY FOR RETAINED DEPOSITS

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My client and her husband run a boutique hotel in partnership. Due to the location and quirky nature of the décor, they are increasingly getting requests to host celebrations and parties in addition to overnight accommodation. As the financial outlay in preparing and staging the events can be quite considerable, the client asks for a 25% deposit up-front, which is non-refundable if the event is cancelled. Please, could you advise on the VAT treatment and time of supply implications of these deposit payments?

VQOTW: VAT VOUCHER CHANGES

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My clients own a hair and beauty salon and have recently started to issue their own gift vouchers. I understand that the VAT treatment depends on the type of voucher, and also that there have been some recent changes. Please, could you clarify?