Tag Archives: HMRC-publications

VAT Business/Non-Business HMRC Internal Manual updated

By Marcus Ward 14 October 2024

HMRC internal guidance manual has been updated on 9 October 2024.

This is likely to affect; charities and similar bodies, NFP, clubs, associations, philanthropic organisations, galleries and museums, “hobby” activities, amongst other persons.

Business or Non-Business (N-B) is very important in VAT as it determines, inter alia, whether a supplier is

liable to register
liable to account for output tax
able to recover (all, some, or no) input tax

The definition of business and N-B here.

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

Further reading

I have written about this issue many times, as it is a fundamental issue in the tax.

The following articles consider case law and other relevant business/N-B issues:

Lajvér Meliorációs Nonprofit Kft. And Lajvér Csapadékvízrendezési Nonprofit Kft

Healthwatch Hampshire CIC

Pertempts Limited

Northumbria Healthcare

What the Guidance Manual covers:

an overview of the meaning of business for VAT purposes
general principles
meaning of N-B
- the term ‘business activity’ (economic activity)
- the concept of ‘business’ for VAT purposes
- the meaning of business
- the purpose of activity
- N-B activities
- persons with both business and N-B activities
- outside the scope income
- N-B activities which result in payment
determination procedures to establish whether an activity is business N-B
the relevant UK law and caselaw (per above amongst other cases)
the general approach for inspectors on business/N-B
factors to consider when determining if an activity is business or not
the link between supplies and consideration
methods of apportionment of input tax and approval of apportionment methods
formal procedures and work systems
clubs and associations
specific issues
legal history
HMRC policy background

This is the main reference material for HMRC inspectors and other employees, so it is very helpful for advisers to understand HMRC’s likely approach to a potential VAT issue.

VAT tertiary legislation – HMRC’s new guidance

By Marcus Ward 13 May 2024

HMRC has published new a guide to all information about VAT that has ‘force of law’.

The manual contains all the tertiary legislation for VAT which HMRC has published – all in one place. Primary and secondary legislation is published on Legislation.gov.uk.

What is tertiary legislation?

Within primary and secondary legislation, government departments are sometimes granted the power to publish additional legally binding conditions or directions on a given topic. This information is known as ‘tertiary legislation’.

Tertiary legislation carries ‘force of law’. This means it has the same legal status as primary and secondary legislation. HMRC has an obligation to publish this information in accordance with the law.

The guidance covers:

(with links to the relevant legislation)

VAT: Business Brief on Tour Operators’ Margin Scheme B2B

By Marcus Ward 22 April 2024

HMRC have issued a BB 5(2024) on Tour Operators’ Margin Scheme (TOMS) for business to business (B2B) wholesale supplies.

This document:

sets out the VAT accounting for TOMS B2B wholesale supplies
explains that businesses may choose whether to apply TOMS to B2B wholesale supplies
details a technical change to the treatment of B2B wholesale supplies in relation to TOMS

Ultimately, the policy allowing businesses to choose whether to apply TOMS to B2B wholesale supplies remains unchanged.

Customs: Example declarations for exports from GB updated

By Marcus Ward 19 March 2024

This Guidance provides examples to help with the completion of declarations on the Customs Declarations Service for exports. It has been updated with the addition of a standard pre-lodged export declaration document.

HMRC videos and seminars for new businesses on VAT basics

By Marcus Ward 18 March 2024

HMRC has updated its guidance to businesses on VAT. The helpful instruction includes: email updates, videos and seminars which cover such subjects as:

VAT basics
registration
registering and joining webinars
accounting Schemes
late submission and payment penalties and interest changes
error corrections
the reverse charge for construction services
accounting for VAT on the sale of cars on finance
HMRC community forums

VAT grouping and divisional registration guidance updated

By Marcus Ward 9 February 2024

HMRC has update VAT Notice 700/2: Group and divisional registration.

VAT group registration

VAT grouping is a facilitation measure by which two or more eligible persons can be treated as a single taxable person for VAT purposes. Eligible persons are bodies corporate, individuals, partnerships and Scottish partnerships, provided that certain conditions are satisfied. Bodies corporate includes companies of all types and limited liability partnerships.

The pros and cons of VAT grouping here.

Divisional registration

This is a facility that allows a corporate body which carries on its business through a number of self-accounting units to register each of those units or divisions separately for VAT. Guidance on divisional registration is in section 9.

Updates

Recent updates include:

Information on what happens if HMRC refuses your application and how to request a paper VAT1 form
The list of notifications a business may receive while waiting for a VAT grouping registration number, has been updated at section 2.17. A new section about late payment submission penalties has been added at section 5.11.

Repayment interest on VAT credits or overpayments – Update

By Marcus Ward 6 February 2024

HMRC has updated its guidance on when repayment interest is due.

If a business has claimed more input tax than it has declared output tax (a repayment return) HMRC will repay the difference by making a VAT repayment. HMRC will also repay any VAT that has been overpaid in error. Repayments are usually made within 30 days. The 30 days starts from the day HMRC receives the VAT Return and ends the day your repayment is approved (not the day it is received). HMRC does not count days taken to check the return is accurate and legitimate, and to correct any errors or omissions, as part of this 30-day period.

If HMRC is late in paying, a business may be entitled to repayment interest on any VAT that it is owed. For accounting periods starting on or after 1 January 2023, repayment interest replaces the repayment supplement.

A business, or its agent can track a VAT repayment online.

Update

Information on eligibility criteria for repayment interest on overpayments and start dates when VAT is not paid to HMRC has been amended. Information on repayment interest end dates when HMRC sets it off against your debts has also been updated.

Extension of VAT energy-saving materials relief

By Marcus Ward 22 January 2024

HMRC have published a new Policy Paper on the extension of energy-saving materials (ESMs).

Installations of ESMs in residential accommodation currently benefit from a temporary VAT zero rate until 31 March 2027, after which they revert to the reduced rate of VAT at 5%.

This measure extends the relief to installations of ESMs in buildings used solely for relevant charitable purposes, such as village halls or similar recreational facilities for a local community.

It also expands the scope of the relief to the following technologies:

electrical batteries that store electricity generated by certain ESMs and from the National Grid
water-source heat pumps
diverters that enable excess electricity from certain ESMs to be used within a building in which it is generated rather than exported to the grid

It also adds certain preparatory groundworks that are necessary for the installation of ground- and water-source heat pumps.

The changes apply from 1 February 2024

The policy objective is to incentivise the installation of ESMs across the UK to improve energy efficiency and reduce carbon emissions.

The measures are implemented by The Value Added Tax (Installation of Energy-Saving Materials) Order 2024.

VAT: Alternative Dispute Resolution guidance updated

By Marcus Ward 16 January 2024

HMRC has, this month, updated its guidance on how to use Alternative Dispute Resolution (ADR) to settle a tax dispute.

Anyone can apply for ADR to help resolve a dispute with HMRC, or to get more information about issues that need to be taken for a legal ruling. The Guidance explains how to apply for ADR and when you can use it to resolve a VAT disagreement with HMRC.

A full overview of the ADR system written by us here, but broadly, it is the involvement of a third party (a facilitator) to help resolve disputes between HMRC and taxpayers. Its aim is to reduce costs for both the taxpayer and HMRC when disputes occur and to reduce the number of cases that reach statutory review and/or Tribunal.

Annual UK VAT statistics 2022 to 2023

By Marcus Ward 4 December 2023

HMRC has published VAT statistics for 2022 to 2023. This is an overview of VAT statistics, covering receipts information and the characteristics of the VAT trader population in the UK.

The Headlines

total VAT receipts in the financial year 2022-23 increased by 1% to £160 billion compared to £158 billion in 2021-22.
during 2022-23, the VAT population was 2,392,790. There were 2,464,109 live traders as at March 2023, with 277,441 new registrations and 397,675 deregistrations in-year.
total net Home VAT liability in 2022-23 was £156.76 billion.
the Wholesale and Retail sector was the largest contributor to net Home VAT liability (32%) with a total of £50 billion.
75% of total net Home VAT liability (£117 billion) was paid by traders with an annual turnover of greater than £10 million.

Receipts dropped significantly between March 2020 and June 2020 due to the VAT payment deferment policy. Further reductions in receipts across the April 2020 to March 2021 financial year can be attributed to economic impacts of the Covid-19 pandemic as well as the temporary reduced rate of 5% for hospitality, holiday accommodation and attractions.