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The impact of the new EU rules for supplies of digital services, new VAT notices and fraud cases are just some of the topics covered in our latest VAT update.

This article outlines recent HMRC announcements, reports on the VAT issues affecting businesses and organisations, and takes a look at the VAT stories that have made the news.

Mini One Stop Shop ('MOSS') compliance with the new EU VAT rules for B2C supplies of digital services
With the first of the VAT returns now being submitted, it is being reported that non-VAT registered UK businesses are finding themselves caught up under the EU VAT rules and having to register for VAT in other EU Member States due to the low / nil VAT registration thresholds across the EU.

We have noticed reports that between 250,000 and 350,000 UK businesses have been caught by the new VAT rules and way in excess of HMRC's initial estimate of only 5,000. It has also been reported that, so far, only 7,000 businesses across the EU have signed up to the Mini One Stop Shops (MOSS), even though there was thought to be at least 200,000 businesses eligible in the UK alone. If these reported figures are correct, then it suggests to us that there is currently a significant level of non-compliance amongst UK businesses.

It is our experience that smaller businesses are reconsidering their digital sales to the EU due to the significantly increased administration burden and increased costs (i.e. updating existing or a need to input new systems and engaging overseas VAT advisers). The UK Government has asked the European Commission to introduce a single VAT registration threshold for which businesses would be exempt from registering for VAT across the EU, so it's a case of watch this space.

HMRC news
Updated Public Notices

VAT Notice 735: VAT domestic reverse charge on specified goods and services
HMRC has updated this notice and it now covers the reverse charge on gas and electricity. This notice, which can be accessed here, explains the reverse charge on specified goods and services.

VAT Notice 1001: VAT refund scheme for certain charities
HMRC has published a new notice for certain types of charities, as announced in the Budget, which are eligible for refunds under a VAT refund scheme. This notice can be accessed here.

Other HMRC guidance
HMRC has updated its non-statutory clearance service guidance, including the addition of a new annex containing a checklist for VAT clearance applications (Annex D), which can be accessed here. HMRC's non-statutory clearance service is available where there is material uncertainty concerning the tax treatment of a particular transaction.

Additionally, HMRC has provided a list to determine if VAT can be reclaimed as input tax on particular makes and models of car derived vans and combi vans. This list can be accessed here.

HMRC has also updated its claim form and notes for conversions (VAT431C) and claim for new houses (VAT431NB) in relation to VAT refunds for DIY housebuilders. The Local Compliance address has been amended on these forms and they can be accessed here and here.

HMRC guidance on how to work out your VAT fuel scale charge can be accessed here.

Media news on VAT

  • It has been reported that 36% of UK micro businesses are unaware of the UK VAT registration threshold that could affect 780,000 businesses. There may be penalties for late VAT registration of between 10-30% of the VAT due to HMRC.
  • We understand that VAT receipts for March 2015 were c.£7bn, compared to £6.1bn in the corresponding period in 2014. HMRC inform that VAT receipts for 2014/15 were £111.2bn, up from £80.5bn in 2007-08.
  • A London businesswoman convicted of VAT fraud has been ordered to repay criminal profits of £207,000 within three months, or face a further two years and nine months in jail. The fraud involved the submission of false VAT returns using fake invoices and manipulated bank statements to claim VAT repayments that were not due.
  • A Dundee businessman, who was previously jailed for his involvement in a multi-million VAT fraud scheme, has been ordered to pay £240,000 following a proceeds of crime hearing at the High Court in Edinburgh. The scheme involved exports to Spain.

Contact us

Should you wish further information on the above, please do not hesitate to contact Gary using the details outlined below.

 

Gary Moore
Direct line 0141 636 9353
Mobile 07812 061 582
Email This email address is being protected from spambots. You need JavaScript enabled to view it.