Tag Archives: HMRC-publications

VAT: New guidance on repayment interest

By Marcus Ward 2 February 2023

HMRC has published new guidance on repayment interest – in cases where HMRC is late in settling a repayment claim for overpaid VAT.

If HMRC is late in paying an amount representing a repayment, ie; when a return shows more input tax than output tax, or a claim is made for VAT previously overpaid, a business may be entitled to repayment interest on the VAT that it is owed. From 1 January 2023 repayment interest replaced the repayment supplement.

Amount of interest

Repayment interest is paid at the Bank of England base rate minus 1%, with a minimum rate of 0.5%.

Start date

VAT already paid to HMRC

The day after the later of these two dates:

when the VAT was paid to HMRC
the payment deadline for your accounting period

VAT not paid to HMRC

The day after the later of these two dates:

the payment deadline for the accounting period
when the VAT return or claim was submitted

End date

Repayment interest ends when HMRC either repays the VAT or sets it off against a different VAT or tax amount that is deemed to be owed.

Notes

any retrospective claims are subject to the unjust enrichment rules
repayment interest is not due if there are any outstanding VAT returns
HMRC will not pay interest on early payments of VAT
if payment on account businesses pay instalments that exceed VAT owed, repayment interest begins on the date the return was due
in cases where HMRC demand a VAT security, and it is not paid, no repayment interest will be due

VAT: Selling goods using an online marketplace – new guidance

By Marcus Ward 3 January 2023

HMRC has published new guidance for use when a business sells goods using an online marketplace (an e-commerce site that connects sellers with buyers where transactions are managed by the website owner) or direct to customers in the UK.

It can be used to check when a seller is required to pay UK VAT.

It is important, especially for sellers based outside the UK, to understand the tax consequences when such marketplaces are used. It is not always possible to rely on the platforms to deal with output tax on sales made to UK recipients.

The guidance covers:

selling goods using an online marketplace
selling goods direct to customers in the UK
checks online marketplaces need to do
VAT when goods are returned to the seller

Updated guidance on agents VAT registering clients

By Marcus Ward 7 December 2022

HMRC has published updated guidance for agents registering business for VAT. Broadly, the new document covers what information agents require, which may be summarised as:

the agent’s Government Gateway user ID and password for either agent services account or HMRC Online services
agent’s name
agent’s phone number
agent’s email address
the client’s name
client’s date of birth
details of client’s turnover and nature of business
client’s bank account details
client’s National Insurance number
a form of ID from the client, eg: passport or driving licence
client’s Corporation Tax Payments, PAYE, Self-Assessment Return, recent payslip or P60

Limited companies

If an agent is registering a limited company client, they must have a Company Registration Number and a Corporation Tax Unique Taxpayer Reference (UTR) to complete the VAT registration process.

Individuals and partnerships

These applications do not need to have a Self-Assessment UTR to register for VAT, but if they do, it must be supplied.

An agent will be asked to verify the entity it is registering, therefore it is prudent to obtain the basic history and background of the applicant’s business before starting the process. Cleary this is good practice generally!

VAT: Face masks deemed to be clothing

By Marcus Ward 24 October 2022

Via Revenue & Customs Brief 11 (2022) HMRC now accepts that face masks should properly be considered to be items of clothing.

This means that face masks designed and marketed as suitable for young children (under the age of 14) qualify for zero rating.(VAT Act 1994 Schedule 8 Group 16).

VAT Notice 714 – Young children’s clothing and footwear has been updated.

Businesses which have been treating these sales as standard rated will be due a refund, subject to the unjust enrichment rules.

VAT: Changes to the Option To Tax of land and buildings

By Marcus Ward 11 October 2022

Changes to the notification process

The Option To Tax (OTT) procedure generally turns an exempt supply of land and/or property into a taxable one. More details here.

HMRC have announced, following a recent trial, that its processing of OTTs has been amended to speed up the process.

Previously, when a business submitted an OTT (Form VAT1614A) HMRC would undertake certain checks to the notification before sending an acknowledgement. Now, HMRC will simply issue a receipt confirming that the OTT notification has been received without checking it.

It was, and remains, the taxpayer’s responsibility to ensure that the OTT is valid. The change removes the deemed uncertainty where taxpayers may have believed HMRC’s acceptance of the OTT confirmed that it was valid. Of course, it also reduces HMRC’s resources in processing the notifications and should result in quicker turnarounds. It is hoped that now HMRC will process notifications within 30 working days.

Changes to OTT forms

In addition to the changes to the process of notifying an OTT, HMRC has also removed the ‘print and post’ versions of the following forms:

VAT1614B: Stop being a relevant associate to an option to tax

VAT1614E: Notification of a real estate election

These can now only be completed online. Please note the online form can still be posted but it must be completed in full before it can be printed. The form can also be emailed to optiontotaxnationalunit@hmrc.gov.uk.

VAT: Trader Support Service extended to December 2023

By Marcus Ward 10 October 2022

HMRC has announced that the Trader Support Service for businesses moving goods between Great Britain and Northern Ireland has been extended until 31 December 2023.

This service is designed to assist businesses navigate changes to the way goods move under the Northern Ireland Protocol since Brexit.

The service provides support to manage digital declarations including completing import and safety and security declarations.

It also provides guidance and training to help businesses understand what the Protocol means for them, enables traders to complete declarations without the need to purchase specialist software saving time and money.

Businesses moving goods between Great Britain and Northern Ireland can sign up to the Trader Support Service and access free online courses and training materials.

VAT: MTD reminder

By Marcus Ward 4 October 2022

HMRC have announced that the existing Making Tax Digital (MTD) online portal closes on 31 October 2022.

What businesses need to do now (or they could face a penalty)

If businesses haven not signed up to MTD and started using compatible software already, they must follow these steps now:

Step 1

Choose suitable MTD-compatible software they can find a list of software on GOV.‌‌‌UK.

Step 2

Check the permissions in their software – once they have allowed it to work with MTD, they can file their VAT returns easily. Go to GOV.‌‌‌UK and search ‘manage permissions for tax software’ for information on how businesses should do this.

Step 3

Keep digital records for their current and future VAT returns – a business can find out what records they need to keep on GOV.‌‌‌UK.

Step 4

Sign up for MTD and file their future VAT returns using MTD-compatible software – to find out how to do this, go to GOV.‌‌‌UK and search ‘record VAT’.

Businesses who file quarterly or monthly VAT returns must complete these steps in order to file their returns due after 1‌‌‌ ‌‌November.

Exemption from MTD for VAT

There are exemptions from MTD and they my be applied for here.

VAT: Fuel and Power Notice updated

By Marcus Ward 4 October 2022

HMRC Guidance: Fuel and power (VAT Notice 701/19)

This Notice has recently been updated. It now covers the VAT Reverse Charge measures for wholesale gas and electricity and construction services (Section 2) . There is more information about wholesale gas and electricity and using the VAT domestic Reverse Charge at section 3 of Notice 735: Domestic reverse charge procedure (VAT Notice 735).

Sections 4.1 and 4.3 now include more detail about hydrogen gas.

Brief overview

The reduced rate of VAT of 5% applies to supplies of fuel and power for qualifying use.

Qualifying use means:

fuel and power for domestic use
fuel and power for charity non-business use
fuel and power where the amount supplied does not exceed the small quantities, called the de minimis limits
fuel and power partly for qualifying use and partly for other purposes, where 60% or more of the supply is for qualifying use

Other supplies of fuel and power in the UK are standard rated.

VAT: Updates on appeals to courts

By Marcus Ward 21 September 2022

Latest from the courts

HMRC has published an update on taxpayers’ appeals. This is a round up of the status of recent cases.

It is helpful for businesses which operate in similar areas, or have tax issues with HMRC and for a general overview on how the courts are approaching certain matters.

The cases which HMRC lose often provide opportunities for retrospective claims for other businesses.

VAT: Input tax attribution to business and non-business activities

By Marcus Ward 15 September 2022

HMRC has issued new guidance on the amount of input tax claimable when an element is attributable to non-business (NB) activities.

If an entity is involved in both business and NB activities, eg; a charity which provides free advice and also has a shop which sells donated goods, it is unable to recover all of the VAT it incurs. VAT attributable to NB activities is not input tax and cannot be reclaimed. Therefore it is necessary to calculate the quantum of VAT attributable to business and NB activities. That VAT which cannot be attributed is called overhead VAT and must be apportioned between business and NB activities. There are many varied ways of doing this as the VAT legislation does not specify any particular method. Therefore it is important to consider all of the available alternatives. Examples of these are; income, expenditure, time, floorspace, transaction count etc (similar to those methods available for partial exemption calculations).

The new guidance is mainly as a result of the Sveda ECJ case.

The definition of business and NB here.

Legislation: The VAT Act 1994 Section 24(5).

Further reading

The following articles consider case law and other relevant business/NB issues:

Lajvér Meliorációs Nonprofit Kft. and Lajvér Csapadékvízrendezési Nonprofit Kft

Healthwatch Hampshire CIC