VAT News

Accountancy Corner - October


International sales and purchase of goods and services

As businesses look to markets outside the UK to stimulate growth, our helplines are busy these days with queries concerning international sales and purchases of goods and services.

The VAT rules concerning place of supply of services is now, in principle, much simplified with the introduction of the “general rule” in the EU, requiring the business customer to account for VAT on a reverse charge basis. However, there are still services which might require a supplier to register and charge local VAT. These include;

  • Services related to land – taxed where the land is situated
  • Admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events (including fairs and exhibitions) – taxed where the event takes place
  • Restaurant and catering services – taxed where carried out

It is also worth noting that VAT rates around Europe are generally on the increase with rates in Spain and the Netherlands increasing to 21%. In France however, the standard rate will not now increase as previously announced and will remain at 19.6%.

Remember that UK businesses can in principle recover VAT incurred elsewhere in the EU but the rules are detailed.

Contact for further information

HMRC to target Retailers, Grocers and the Legal Sector

Following on from HMRC’s targeted approach to specific business sectors across the UK we understand that the latest groups to receive their attention will include Barristers across the UK and Retailers and Grocers in the South Wales area.

Independent Financial Advisers – Bloomsbury Wealth Management

It’s quite often the case that changes in an industry sector, for non tax related reasons, creates a VAT issue, the IFA sector is currently experiencing such an impact issue. The impact of the Financial Services Authority changes to how an IFA should interact with their clients and charge for their services will create the need for that IFA to address it’s VAT position as well.

Historically, most IFAs have stayed outside of VAT registration on the basis that they are providing VAT exempt intermediary services which bring together a financial product provider with a person seeking that financial product and the income they receive comes via a commission.

Now, with the move to a “charged for” service clearly visible to the IFA’s client, the recognition is that sometimes the role of the IFA can be more general and fall short of the role of an intermediary and become general investment advice and subject to the standard rate of VAT.

The recent Bloomsbury Wealth Management case brought into view the steps which an IFA should take to ensure that their client engagement procedures can evidence VAT exemption treatment of the IFA’s charges. HMRC argues that the case does not change any existing VAT guidance on the matter and a link to the key HMRC guidance note on the steps you, as an IFA, need to follow, is attached below.

Consultation: Consideration of the case to extend the education exemption to for-profit providers of education

Further to the Budget 2012 announcement a consultation document has now been issued to address thoughts from stakeholders as to the VAT treatment of education, particularly at university degree level, to ensure that commercial bodies supplying courses similar to universities are treated fairly.

The purpose of the review is to consider whether for profit providers of higher education should be placed on the same footing as not-for-profit and publically funded providers of HE, such as universities, that can exempt their supplies of education from VAT.

This consultation was published on the 12th September and closes on the 5th December 2012. We will be making contact with all of our higher education clients to discuss the impact of any changes in this regard and to gather comments in order to contribute to the consultation process.

View a copy of the Consultation paper »

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